Posted on 25th November 2011
Social investment, we know, is of interest to philanthropists, though not everyone would define it as philanthropy. Over recent months we have seen a steady increase in news around social investment. As a result we have decided we will bring you a regular round-up of social investment news with links so you can find out more.
CAF Social Impact Fund lends over £1m
Philanthropists who have invested their capital in the CAF Social Impact Fund have enabled CAF Venturesome, which manages the fund, to lend over £1m to help 10 charities in the first five months. These include Link Community Development Fund, Grasslands Trust and Coastnet. Since the fund’s launch, over 200 charities have enquired about bridging loans, working capital or an additional line of credit.
The CAF Social Impact Fund enables philanthropists with a CAF Trust to invest their charitable capital at 0% interest for a fixed period of between three and six years. At the end of the term, the capital is returned to investors or reinvested in the Fund.
Head of CAF Venturesome Paul Cheng said: “We welcome the increase in social investment products that will help create a more robust social investment market place. The social impact fund fills a very specific funding requirement, namely access to affordable finance that is not in direct competition with the other social investment products.”
To read more click on the following link:
All Power to Philanthropy?
BIG to fund social investment proposals
The Big Lottery Fund (BIG) has announced a £6m grant programme to support organisations that are developing social investment proposals in the UK. The initiative called Next Steps: Supporting Social Investment in England will award between £40,000 and £1m to social investment proposals that need extra funding. The funding is available to organisations acting in the role of commissioner or intermediary as well as frontline organisations who will deliver the interventions to tackle social need.
BIG's England committee chair Nat Sloane, said: "This will help us to build some significant learning about social investment and how in practice it could be used for the benefit of communities and those most in need.”
He added: “Now is an exciting time for social investment with the BIG-funded Peterborough Prison Social Impact Bond underway, and the Big Society Investment Fund (BSIF) beginning to make key investments in this area ahead of the launch of Big Society Capital next year.”
New guide warns of risks of social investment
Think tank New Philanthropy Capital says government cuts and a decline in donations is making more charities turn to social investment as a possible source of funding. However, its new guide Best to borrow? explains the risks and benefits of this new type of investment.
NPC chief executive Dan Corry says: “Social investment is an exciting new way of funding charities. But it is no silver bullet and charities need to consider whether it is right for them as there are risks involved.”
The guide says charities must view social investment as a loan that they need to be able to pay back. It says: “Failing to make repayments may put the charity under financial pressure or, at worst, could force it to close.” NPC estimates that over £500m of social investments have been made so far in the UK, and more new products are coming on the market. The disability charity Scope recently launched a £20m bond scheme to expand its fundraising programme and charity shops.
The government has committed to supporting this emerging market with the announcement of a new £40m Social Impact Bond to support chaotic families and the launch of Big Society Capital, a new wholesale bank that will begin investing in 2012.
Download the NPC guide to social investment for free here
