An Update on Social Finance
The Trust's Bill Osborne, right, with Finance Minister Simon Hamilton MLA (centre right).

An Update on Social Finance

09 September 2014

Nigel McKinney, Director of Operations at Building Change Trust outlines the work that will take place on the theme of social finance in the coming months.

The Trust’s involvement in social finance stems from its award of a £1 million capital grant to Charity Bank to help develop its deposit taking, loan making and investment readiness activity in Northern Ireland.

As the Trust Board started working with Charity Bank and as we engaged with a range of individuals and organisations we became more convinced that looking at new forms of finance and investment for Voluntary, Community and Social Enterprise (VCSE) sector organisations was essential, as was taking action to equip organisations to understand and ultimately take advantage of and benefit from such forms.

Back in 2011 we financed a piece of research jointly commissioned by Charity Bank and the Ulster Community Investment Trust (UCIT) entitled Social Finance in Northern Ireland: Innovative Thinking and Action. This looked at the supply and demand of social finance and made certain recommendations.

At the launch of this research in 2012 the Trust outlined that it had set aside £2 million overall for social finance activity. Along with the financial investment, we will also be working on the following areas: 

Development of products

We need to find appropriate products for Northern Ireland. Initially we will be looking at hybrid products, including grant/loan combinations, followed by more complex offerings.

We commissioned Charity Bank to consider what such a programme and products might look like, taking account of current and best practice across the UK and internationally.

Their report – The Social Investment Hub – is the model to incentivise change in Northern Ireland.

It was reviewed by the Trust Board in July and we are now considering the next steps. With about £800,000 remaining to invest in this area, we anticipate a significant sum will be spent in the revenue side of a regional investment readiness programme and also an equally significant sum in the grant and administration element of a new grant/loan hybrid product for Northern Ireland.

However, we have yet to go through a process of exploring and appraising all the options to achieve both of these things and anticipate engaging with key stakeholders in early autumn. We know that £800,000 won’t be enough to achieve our vision and objectives and it will be essential that others join us to invest in the revenue expenditure of a future programme and potentially provide a source of capital for any grant loan hybrid. We aim to have a new initiative commencing early 2015. 

Community Shares pilot

Community Shares are a unique form of social finance which can be offered by a special form of cooperative called a community benefit society. As the name suggests these are established for the benefit of a community of people or place wider than the membership. They have an asset lock and interestingly can also achieve charitable recognition. Critical is the ability of the society to raise finance through a community share offer.

We were aware of really interesting developments in this area in England so we explored them further and then commissioned a pilot project to stimulate the development and subsequent share offers by up to 5 community benefit societies in Northern Ireland. Our analysis was that no such societies existed and we wanted to see what might be possible. 

Cooperative Alternatives were contracted by the Trust for an initial 2 year pilot programme and our evaluation of the first year, which ended on 31 March past, highlighted that good progress was being made but that stimulating and supporting the development of 5 such new social enterprise entities was a tall order. 

We are pleased to announce that we have now extended the programme to run over 3 years, ending March 2016, with the intent that Cooperative Alternatives can reach many more communities and individuals to explain what community shares are and hopefully work with more organisations that are keen to explore and use the model.

Click here to find out more about the Trust's work in Social Finance. 

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