The SIB Group are

+

Growing the local social economy

with place based investment

Chris Dadson

Business Development Manager

About SIB Group

Minister for Civil Society, Nick Hurd MP:

“I am interested in the opportunity for place

based investment to provide communities and

social enterprises with the finance they need to

build a strong, local economy and create real

social benefit. I would encourage Local

Authorities and Local Enterprise Partnerships to

engage with the sector and consider establishing

a Local Impact Fund in their area.”

Place based social investment

• ‘Local Impact Funds’ can help direct investment into local places to increase

jobs and growth in local areas, grow a social economy and support social

entrepreneurship.

• Local Impact Funds are a key mechanism for delivering place based social

investment. They:

• Combine wrap around business support with growth investment.

• Connect European, national and local supply with local demand for

finance.

• Support local economic and public services strategies.

• Two pilot Local Impact Funds will be launched in early 2014.

• Local Impact Funds will build on existing local and national infrastructure and

business support: enhancing and not duplicating the activity of local

organisations.

Local Impact Funds: Overview

Charities and social enterprises make a positive difference to society and the

economy

• 38% work in the 20% most deprived communities in the UK (compared to only 12%

of SMEs).

• £1 public spend into social enterprises creates £6.25-£8.33 of GVA (£3.57 across all

markets).

There is a massive unmet demand for social investment

• £1.3bn - £2.1bn annual demand for social investment, £286m of deals in 2012.

• 38% annual growth of the social investment market: £1bn of done deals in 2016.

There is money available to grow the supply of social investment

• BSC - £600m

• £6bn of European Structural and Investment Funds, 2014-20, can be drawn on.

What is now needed are the mechanisms for connecting supply to demand…

Local Impact Funds: Context and rationale

• Be locally driven, flexible, and responsive to need and context.

• Provide a tailored package of support and finance for charities and

social enterprises at all stages of their journey, from start up to sustainability

and growth.

• Draw together into one place an appropriate blend of national and local

actors and interventions, achieving more through the sum of its parts.

• Support social economic growth anywhere in the world, therefore learning

will be shared with interested partners across Europe.

Local Impact Funds: Vision

Local Impact Funds: Framework

• Source investable charities and

social enterprises, identify potential

future investees, and assess their

support needs.

• Support charities and social

enterprises on their journey

towards growth and sustainability,

drawing on existing support, and

designing new support structures

where relevant.

• Fund them in a way that is flexible

and responsive to their needs, not

the needs of investors.

Encourage continuous learning and evaluates

what works best in a local area.

• Charities and social enterprises need to sell their products and services into

functioning local markets if they are to thrive.

• Local stakeholders can help enable the sustainability of Local Impact Funds:

• Clinical Commissioning Groups (CCGs)

• Local Authorities

• Police Crime Commissioners (PCCs)

• Other ‘buying’ institutions such as Universities, Housing Associations and

large local employers.

• Ultimately the Local Impact Fund can be an engine for public service reform,

and provide a hook for corporates to support the sector through CSR activity.

• The new Social Investment Tax Relief is a big opportunity to attract new and

local investors into solving local problems.

The time is now to make the most of these opportunities…

Local Impact Funds: Importance of ‘Local’

Local Impact Funds: Model

Key Questions

Terms of EU money?

Pari passu? Grant

component? First

loss?

How much pipeline

support is needed?

Who pays for costs?

Set up costs.

Legal costs.

Evaluation

Pipeline support modelling

Start up Incubation Capacity building Investment

readiness

Local Impact

Funds

100% grant 100% grant 100% grant 100% grant (25%

repayable)

100% loan

Range < £5,000 < £25,000 £10,000 - £75,000 £50,000 - £150,000 tbc

Amount £3,000 £17,500 £50,000 £100,000 tbc

Volume 500* 250* 50* 5* 100

Total £1.5m £4.375m £2.5m £0.5m £10m

• * Work still needs to be done to clarify the pipeline volumes needed to support

each LIF

Key milestones

Milestones

Local Impact Funds referenced in BIS preliminary guidance to LEPs April 2013

Local Impact Funds included in supplementary guidance to LEPs July 2013

Launch of the prospectus and information sharing events September 2013

Launch of the 2 pilot Local Impact Funds Early 2014

Gain EC agreement for operational programmes January 2014

LEPs to commission proposals for Local Impact Funds, as relevant March – September 2014

First full Local Impact Funds become established Early 2015

Local Impact Funds rolled out across England. Aspiration for up to

20 Local Impact Funds to be created.

2015 - 2020

Scaling the model up

• The SIB Group has successfully applied to run the Liverpool City Region Impact

Fund and will manage ERDF as part of the world’s first Local Impact Fund.

• We are on target to establish a second pilot (in Northamptonshire) with

investment from new entrants into the social investment market.

• We will conduct an early evaluation of both pilots in 2014 in order to share

learning with interested stakeholders.

• We are working in partnership with the Key Fund to manage a network of Local

Impact Funds across England.

• We believe there may be demand for around 10 Local Impact Funds in 2014,

and up to 10 in 2015 – 2017.

• We will share learning and work collaboratively through a network of partners

who set up and manage Local Impact Funds.

• We are investigating the potential to create a template approach to developing,

financing and managing a network of Local Impact Funds.

1. The Liverpool City Region (LCR) Impact Fund is being designed as a partnership

between the Adventure Capital Fund (the parent charity of the Social Investment

Business Group) and Social Enterprise North West (SENW).

2. We are looking to launch the £2m 18 month pilot Fund on 23 January 2014, to

invest into c.20 charities and social enterprises by June 2015.

3. This pilot draws on existing ERDF investment from the 2007-13 programme, and is

linked to an existing project: Big Enterprise in Communities (BEiC) programme.

4. BEiC is a £7m business support programme for Liverpool City Region being run

by SENW, and will provide the Fund with a pipeline of investable organisations.

5. We will match the £1m ERDF investment into the Fund with a £1m investment of

ACF’s Communitybuilders endowment.

6. We are applying to Big Society Capital (BSC) for further investment into this fund.

Liverpool City Region Impact Fund

1. The Northamptonshire Impact Fund is being developed in partnership between SIB,

the University of Northampton and UnLtd.

2. We are looking to launch the c. £6m 18 month pilot Fund in April 2014.

3. As there is no ERDF investment from the 2007-13 programme to access for this,

other investors have been approached: local public and private investors have

committed £2m.

4. This Fund will support charities and social enterprises around the service

transformation agenda, helping them deliver more contracts in public service

markets.

5. An ‘ecosystem of support’ is being designed alongside this Fund, building on

existing support that the University of Northampton and UnLtd already provide to

social enterprises.

6. SIB will also invest £1m in this Fund, and has submitted an application to BSC for

further investment.

Northamptonshire Impact Fund

More information about us

www.sibgroup.org.uk

@TheSocialInvest

020 7842 7788