understanding the demand for and supply of social finance
TRANSCRIPT
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Understandingthe demand for
and sUpply ofsocial financer B s Bk
Iona Joy, Lucy de Las Casas and Benedict Ricey,
Ne Philanthropy Capital
THE BIG SOCIETY FINANCE FUND
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part 1: the crisis of reform in pUBlic serVices 2
About NEStA
nesta UK x w v v
u j . i wk b b w, u b n l,
v x.
nesta w u wk u b
x , v -
. www...uk
About NEw PhilANthroPy CAPitAl
nw p c (npc) v w
v v. ou qu qu u
vb b .
W u b ub v.
ou , , k b u, u UK, v x u. ou
v u w u . i
, w u - b v.
About thE SEriES
t ub u w w v bu
v k u B s u u
u w.
Also in the series:
Twenty catalytic investments to grow the social investment market, Ul, pu
nesta.
Investing or the Good o Society Why and How Wealthy Individuals Respond,
bk u w i mori nesta.
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foreWord 3
One o the most pressing questions acing a developed country like the UK is how to put our considerable
resources to work in innovative ways to address major social challenges.
These challenges, rom social exclusion to long-term ill-health, and rom demographic change to climate
change, are growing. But the ability o our public services and civic society to respond is too oten
constrained by straitened public fnances or by institutional inertia.
There is widespread agreement that innovative approaches hold the key: shiting our eorts rom treatment
to prevention, and replacing central control with the energy o empowered citizens and communities.
Social investment can help us achieve this. By fnancing new approaches, increasing the diversity o
provision, and allowing money to be diverted rom the symptoms o social problems to their causes, it helps
innovation take root.
The Governments enthusiasm or social investment, exemplifed by their establishment o the Big Society
Bank, is to be welcomed. We are excited to see the realisation o a project envisaged 11 years ago when the
Social Investment Task Force began its ground-breaking work.
The Big Society Finance Fund is a practical contribution to this project. Working with Panahpur and UnLtd,
two o the UKs leading social investment charities, we have constructed a portolio o pilot investments to
demonstrate the kind o products and services that a thriving social fnance sector could enable. Alongside
the portolio, we are publishing two substantial pieces o research, looking at UK investors interest in social
investment, and the demand or fnance among social enterprises and the organisations that serve them.
We hope that the Big Society Finance Fund, through its portolio o projects and research base, oers a
helpul practical contribution to the development o the UKs social investment market.
As always, we welcome your thoughts.
Stian Westlake
Executive Director of Policy and Research, NESTA
April 2011
FOREwORD
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contents 4
CONTENTS
Part 1: iu 5
Part 2: su 6
Part 3: s 10
Part 4: xu 19
Part 5: f u: B s Bk 30
Part 6: r 32
Appendix A: Bku 36
Appendix B: xu 47
Appendix C: ivw 48
Endnotes 49
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5part 1: introdUction
PART 1:
INTRODUCTION
Overvie o research
t B s Bk (BsB) u kv qu 2011. t w b nesta
B s Bk.
t : set out the natureo current and uture demand or capital rom
social fnance intermediaries and to develop an
understanding o the mix o fnancing the Big
Society Bank will need to support.t v bnw p c (npc).
npc w k k: , u, u. i u, , , v u , bu w u. t , u, x - v b UK. t , u, k u .
t UK k . i w k.
Approach
t k v , bu wu , u k v, vu :
Wk u : u w vw ubb bu k. t w
w k-v u u , ,.
ivw v : w vw
xu , ubb x bu u uu k.
Qu : w uub u bu u -v
u z k. W w u vw u u.
W u w vw, wv u kw x. a vw b u ax c.
Structure o the report
ou u qu bu k: w v v, w b , w uu. i b w v u v qu, .. bu x , BsB k. t v w bku w w u v u u.
t uu w:
Summary o fndings: v -v vw k.
Social fnance fndings.
Financial exclusion fndings.
Financing social housing: BsB.
Recommendations: npc BsB b u .
Appendices: u u.
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part 2: sUmmary of findings 6
I b xu k UK BsB u , k .
i b k w u b u
v. t :
ow v v xu vu.
c .
ov bu w u b xv v bu v .
dv w u.
Bu k.
t u k v , npc bv u BsB. hu v u x 3 b x u w v. ou vw, vw u vw, BsB
w b b , u wu v . hwv, v 20 ,u v u u bu u. t x v uu bu k u v - ,w u p 5. o u v w u, w , bu u
b v k u.
u xu k, x k ju u:
1. The absolute aounts needed ro a underlie the BSB total hundreds o illions ratherthan billions o pounds.
2. By ar the ajority o deand or capital is
or sot capital , - . t BsB u x v u v (u u , u bw). B , w w k u .
3. Sot capital does not ean beingundisciplined. t b w v . cu w v u ub uu, w u ub, w b k u .
4. Building the aret is essential, wqu v .B k uv ; b qu v b ub.
5. The BSB ay have to ae a trade-obeteen building the aret and aintainingits capital. mk-bu v
qu v k w v. t u w u BsB u , w v. hwv, k-bu v u v v wv , w b v v .
6. There sees little appetite or a neinterediary entrant u
v w x. hwv, wu k /qu v w u x v w k.
PART 2:
SUmmARY OF FINDINGS
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7
t BsB, u b bu bu : , b v ? o v
u? i , qu v v- w b . i BsB w , u, w u u u v wu w v b v b v. a qu w BsB w k v, b u? a, w w k w.
npc u p6 u k u u .
2.1 The social nance aret
d w. Bu k v.t w , , b u bub . sub w u b uu: k v v, v v v k.
ou v uw b , wu w u vv u x (bw). t w w u w x w :
Hard or coercial capital to lend on to/invest in investees: w k
u u, bu qu, v u k, v w . t wu v u BsB u u bk v u qu k, w u vu k.BsB u bu uw 50 k v x w .
Sot, sei-coercial capital to lend on to/
invest in investees: x k b siv Bu (siB) u bu w v xu .s /
b u. BsB ubu uw 50 k.
Capital to und interediary capitalisation:
u v w v /qu k.i bu wu u w , v k w . npc bv ub 20 uub BsB.
Capital to und interediary overheads: ub ( qu
) u w v v/v b v . t bju , ub: u k - uk BsB bjv. t u 15 20 v x , w b .
Capital to build capacity o the sector investees: .. v ,u v , bu . m qu v bv : w v b b u k ub. t BsB u b u bu w v, cbux: b bjv, u v w. npc qu k.
Capital to build capacity o the sector investor aret: v k. , v k -v k. t u w vb v v b. i BsB -v v b ,v , u b v u u u; w w v bu uu bu k
w u j k . s w v u, w b ub-k. hwv, BsB u b v u, bu v
part 2: sUmmary of findings
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8
. npc qu k.
Developent o ne products: , bu
v w b v k, v w u u . i qu k, bunpc u 20 u w w.
i , npc BsB infuencing the legal, regulatory and taxenvironent or the aret. iv kb uu uvb x bk vb vu
. h v u w x v wu b w. tbk u greater transparency inthe aret, u , , u .
u u b u p 3.
2.2 The nancial exclusion aret
t b w u u . W k x . -bu , w u u v bub -. ou u qu v x :
Sot, sei-coercial capital to lend on:u 36
k xu vu.
Capital to und interediary overheads:7 16 v k w .
Capital to build capacity o the sector:22 25 ( ), v uub u ub (..
). 7 10 ( x ) wu u 15 ( ) wu u c sv o
u.
s w xub x , ub ,
u k . t bu b v u ( 4.1.1).
sub bb v x w. ou u -v 22 25 , uw w p o wku k u , vb, v, b b w . t
wu u u b -u x ub uv x v . c u u v w b. i , wqu x u.
t, v v, w u v . The rst to opportunities could beseen as a short-ter ay o ensuring lenderscontinue to ae loans. t bu u xu x . t , ,u b investent in the long-tersustainability o the sector. i bu uv w u k xu vu uu, wu x u.
2.3 Suary o deand or the to sectors
tb 1
w .
part 2: sUmmary of findings
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9part 2: sUmmary of findings
Table 1: n b xuk
Benets
Hard, or coercial, capital to lend on to/invest ininvestees
c u u , bu v v. i b , -b , qu.
t u u
w k ( ).
Sot, sei-coercial capital to lend on to/invest ininvestees
a, u u . i b , -b , qu.
Bu u.
Capital to und interediary capitalisation
t w w w . i
u.
Capital to und interediary overheads
t qu wk, bu npcbv bjv u b v
ub. npc wu k u u , u u x uv.
Capital to build capacity o the sector
i u, b c sv o.
Capital to develop ne products
Social nance
g: 50 illion to 100illion qu
k.
g : . 300 400 v x .
g: 50 illion to 100illion.
g : . 200 300 v x
.
g: 20 illion, BsB
bu; 50 illion .
g : . 50 v x .
g: 15 illion to 20illion v x
, w .
Uqu.
g: 20 illion BsB
bu.
g : . 50 uw v x .
Financial exclusion
n qu.
g: U 36 illion v x .
o qu u
u.
g: 7 illion to 16illion v x
.
g: 22 illion to 25
illion v x v .
n qu.
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part 3: social finance findings 10
t u v , w bu k b , , B s Bk
(BsB). t u qu x k v k.
t v , BsBu . ou vw
uu bu uu wk k, wu v BsB. t u ax a - uu .
3.1 Bacground: explaining the aret
3.1.1 maret structure and an overvie oinvestent optionsa vvw uu k u ,
PART 3:
SOCIAL FINANCE FINDINGS
Figure 1: su u k
Companies
Charities
Social, enterprises,
e.g. CICs*, mutuals
Individuals
(retail)
Liquidity
(e.g. deposits of loans)
for onward supply
InvesteesInvestors Intermediaries
Capital to fund
new products
Capital to
fund revenue
Capital to capitalise
intermediary
Capital for
onward supplyIndividuals
(wealthy donors)
Trusts,
foundations,
corporates
Government
Investors also invest directly
*a cic u , k u .
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part 3: social finance findings 11
u, v .
u 1 u w k wk.iv u qu k, uu v , bu
. t vqu w u k v. d ququ v v.
v vw, u, u k v k, w b v w:
Financial returns coensurate ith rishile achieving social returns. iv uu , v ,.. B Vu, t Bk. i kw .
Financial returns approaching coercialrates, but tending to ignore ris wuu u. iv , .iv wu u w k b u w. npcwu u rb ,B Vu s eu u,c Bk ca Vu bk.
Social returns ore iportant than nancialreturns. t vv 0 v w , k -. iv . iv u ca Vu . t
i v.
Social returns but nancial loss e.g. grants.o b !
t k bx. c Bk ( , bk) w x w . t s iv tk w 2000. Bu u x u 2002 .1t k -, bu w
u v v v w ub . t v u .
ax a x :
u.
iv v v.
avb .
ob w uu.
s k z.
s w bku u.
a
b u u vw,ax c.
3.1.2 Overvie o the arett k 1990/2000, b w : w k v.
t u v bw / t s iv Bu (siB) w vu Vu B iu iv.c k w zb u B Vu (145 ) t UK (450 ). a w - u b , c Bk 60 , v . s b b cudv iu (cdi) b cu dv a (cda). W npc kbu cdi , wv, w uu ( bw).
t - b siB,w u Vu cdi . i b siB, k k .B iu iv x wu b , w : k v , . t x s e u bu w ub u fw
b v. s .
W v u bu w . e
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part 3: social finance findings 12
w u k w, bu wu u v w zb k.a x u wu b a ( cl) B, x wb v bu u
b, bu wv u b, w b .t s i B w , w v v v b b. t si B qu x. cv uk v w k u v w u
u . n kv w. Bu w . cdi b w w u( w ) u
.
3.2 Investent opportunities or the BSB
3.2.1 Options or all investorsB k uu bv, tb 2 v.
Table 2: o v
Option or investors
iv qu wbu v. h
: tb 3.
iv b uv v (..
).
iv v. t vwu b ( u
uu); xu (.. it).
iv v v
w u.
pv v k, .. -bu
v -bu v.
Investent type needed and liely return
Can result in good nancial returns, k/w v. s k u v.ex wu b B Vu, t v c Bk v
b . Bu k vw bu w u k:Vu, u u b s iv Bu (siB), wu bx .
Liely to require patient capital, u w-b, u u w k wv. t uu u bu bk b. c Bk b,
u.
Liely to require grants, v , w v u uu u. s-uw x v b ubv. c Bk v w b w . l
cu dv iu (cdi) v vu ub u.
Liely to require grants, or very patient capital w v k. ex wu u B Vu u, w w u
b v ( ), u u w u. t v s i B wu b x, u v, u.
Grants ill generate no direct nancial returns but can generate good socialones. s iv Bu 1 v
v b v 27 uu .
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3.2.2 Capital gaps: potential or the BSBtb 3 w u vb u bv. t b npc v
, x ax a.
13part 3: social finance findings
Table 3: d u
Type o capital
h, , /v v v
s, -,
/v v v
c u
c u
v
c bu
au qu*
p BsB
t
ru
au qu*
p
BsB
t
ru
au qu*
p
BsB
t
ru
au qu*
p
BsB
t
ru
au qu*
. 300 400 v x
m
50 100 w k qu, .. B Vu
l; -b ; qu ( u)
r: - (15 ) qu 5-7
u u u w k
. 200 300 v x
i v (v siB cdi)
ivv v , u w
50 100 v u u
rb b ; -b ; qu-qu.
s -
i v bw 0 6 , u
w k b
. 50 v x , .. c Bk 20
20 u BsB k 40 k
p
V -
m bk; u; k
g v
. 15 20 v x
10
g/ w k -
V -/u
, bu v
Uqu w qu b cbu x?a ncVo u c
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14part 3: social finance findings
3.2.3 Explanation o opportunities in Table 3npc vw u b v, z k, k uu . t u tb 9 ax a, 41.
t u b u w:
Hard or coercial capital to lend on to/investin investees
c : u v , u b b t c Bk.
hwv u bk j k v wu x.
l qu: u BsB, v u .
U qu: wu w u . , qu b vu k, vB Vu v 50 u. u bv.
Sot, sei-coercial capital to lend on to/invest in investees
s- : c Bk wu k x,bu b w v wu b v (bw).
gv-ub : u w w w uu b siB. t v k , w u uu.t BsB u b v . t u ub 50 , siB .
cx - , qu-qu: u , w b v v. a bu v v. Bu b u w w u u wk. t BsB wu b w u, buwu b w u k w u. t
u v v . m v bu cdi ( b ).
Type o capital
c bu
c vw u
p
BsB
t
ru
au qu*
p BsB
t
ru
Uqu: u w qu, w
i u bw bu , k uu vb
g
pu
, bu v
. 50 uw v x
20 BsB k 40
p
l-
dv uw u
*g k z
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15part 3: social finance findings
Capital to und interediary capitalisation
a , bw w u u,v u b
v. U 10 ( cdi) b qu x - u, w u bk u c Bk - 20 .
Capital to und interediary overheads
npc u (u w ) u ub u
, wu u b qu u v ub.
Capital to build capacity in the sector
t v k, v, v, unpc qu wb . siB Ul v b v v , wcbu. a vw uwu b . r wu b .
iv k u. npc w, vw v wb . hwvnesta v w .
Capital to und ne and esoteric products
pu k s i B v. dv u b uu , bu v, k w, b v. x, u k k v; B Vu u (w ); k
v b ( wuu). t u b v BsB b v v w w. d qu: npc k 10 , bu b .
npc v x u k.t u v, bu u u u .
npc bv u qu w w :
Notes on the odel
a b x, qu
w . t w k v, k v vu . s u v u:
Fuzzy boundaries to the sector. a k v bu:w u v b? iu u, bu Ul . W qu b, v b v? rb u v xu. a U Bk u uu .
Poor historic and current data. au w x; u u/
- u u , .. siB B Vu. a w npc w siB u w u x.
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16
u x k ax a, a.1.
W v u x z ax a, a.5.
3.3 Opportunities or building the aret
s uv k.s v bu k bu v .2 hwv, , v, w k bu -u ku (cic), , v w b v w .
The social nance aret is still at an earlystage, and so building a social nance aretis uch ore than just providing a certain type
o capital. t bw v. t k , bu u. a u ax a .
Bw qu:
su u v b b siB u.
c-bu v b
v /v b -u .
p u
b uu u uu b v . i k u u, b x .su x u v bk.
dv u w v w v,.. v k/w . t b w u k u.
iv v v: uu; x v; uu. t b bb bu u b u v u u, w u b wu
u v.
iv u, u:
v v k v ;
u u v;
v k k;
u u u w;
u bk bkb .
part 3: social finance findings
Setchy public data contradicts conversations. i u w bu v w w ub vb.
Projected data reliant on hearsay. n- vw bu !
CDFI data not analysed in detail. W k cdi wu u v.
Loans revolve, so odelling availability o credit to organisations is dicult. t b v: vb v w. t qu u vv , ju w z.
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17part 3: social finance findings
i u b . lk v b u u v, v? i u ?
3.4 Overall ndings
d w. ex BsB , u cu dv a (cda) . Bu k , w , ,b u b ub . i
npc ub b v uu: k -bu.
ou BsB v u w b , wu wu v v u x ( bu bw). t w w u w x w :
Hard or coercial capital to lend onto/invest in investees. t u b u BsB u u b k v u qu k, vu k .W , v u vu , BsB wu v w v u. B v (u ) wu v k w v k v .Bu BsB u v w u
v. t u bu v 50 v, v v .
Sei-coercial, high-ris capital oronard investent. t u siBu u w v ub k, u u. t BsB k, bu v siB: u u(u) u
v. t BsB u vuv b siB u. t u b uu uu, u bb uw 50 u. Bu BsB u
k u , -w .
Capital investent in interediaries. cw b u
qu (.. ) . ru wu b u x w . t ub 20 50 b u. npcbv , u, bu wu u w, v kw .
Capital investent in interediaries to reachsustainability. i
w v u u v u v u w u v / ub w v. i w b, bu, ub vu w vw w v . npc b b b , bu wu b u , v u. BsB u bubu 10 . n u bx u bu u v . v, BsBu u u u b u ub bu .
Capacity-building o investees. m qu v bv , wv b b u k ub.gv siB x k
u v, u b uw 50 , unpc v .Wu v, w k v k b k v. t BsB w ubw bu v, k v wk. o , u b v b u. tBsB x u -bu x u bu
v . Wu v bw , w v u? W v bw , u u? npc
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part 3: social finance findings 18
v v .
Capacity-building (2): broadening oinvestor aret. iv k -v k u
vb v vb. s BsB w b vb -v v b, u b wbu uu v u u u. s w v u, w b ub-k.t u qu b qu, bu u b 50 . t u u v k, wu b qu . m
, npc bv wk b uk u vk, bu wu qu u x, , u v x npc qu u wk.
Developent o ne products. t v v w u, u s iB. t BsB wub v w. BVu u vu u b v u b vu k, bv u b uu .t v b u ; b k b k v, w u k k v. hwv, w , u v u. BsB u u 20 . t u v b
x: vv, bu k w k w .
t BsB u v:
iv v w vb (.. bk ).
cw u k v, , b ub w qu u w
w x .
u siB (v u
u ).
sk w u wk, bk - u.
t BsB u v v . npc bv u u w , u b x b fw.
Other ey points
Structural issuesc u u b qu-qu
u cic wuu. t b w: b x, v v u. a , v v v v u , w quz w. Bu k. s v b uu, b w uuu w u wk w .
m vw uu x, u, uu wu b vb.
Transparencynpc wu u BsB b bu u, w v, w v, w u. npc u xu b v u b siB. siB w vb, w qu, bu w ubu u w u, ,
u, . npc bvu u b u vb ub , v. n u b u i qu b u.
Product and aret developentt wk b v k, v w u uw . Bu w u b, k
u .
ax a, a.5 u w qu b k u v .
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part 4: financial eXclUsion findings 19
4.1 Bacground: explaining the aret, andan overvie o investent options
4.1.1 maret structure
A state in which all people have access to
appropriate, desired fnancial products and
services in order to manage their money
eectively. It is achieved by fnancial literacy
and fnancial capability on the part o the
consumer and access on the part o fnancial
product, services and advice suppliers.
Denition o nancial inclusion, TRANSACT.
The ain playersa w v wk xu .t w u: w u . t u bu u vb xu ,.. b bk u; u. t k kw xu , b k b . ou u vb xu, w u u .
t w b u
xu bk u b- . r bk v bk u u bku v u v b. W w vb xu v . c u cu dv iu (cdi) v v
( u 2).
t UK u v bk 1970. i w ub 1980 , w u , u
x uu u. B 1987 w 108, ub b bu600 b 1997. m w w-bu. s , b u ub
u 444. m v v vu , bu - v b.
u 2 u w u wk.
p cdi v b u 15 UK. t cdi v b -u v v 42 px u vu vu v ,u r dv a. tv w 2005, u b 10 v d Wk pgw u. t w b v u, u w w k k.
p cdi, uk u, w bk. t k v b uv . t w
cdi , v cdi ( ) bk . h, cdiv xuv ( ub- ) w b v bv b u. i , u ub u v.
v v, u dierences beteen credit unions
and personal nance Counity DevelopentFinance Institutions (CDFIs) are scale, services,custoers and sustainability.
Scale: u u
PART 4:
FINANCIAL ExCLUSION FINDINGS
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part 4: financial eXclUsion findings 20
cdi . cu b b v b UK; 444 u w,3 bw k 460 2009. s cdi xu ,wv 13 , k
bu 7.6 2010.4 cu v , bu v u w- v e , W,s n i. p cdi u v e n W, n e, W m,su e l W, bu ub.
Services: c u v v w , w cdi
v . i k ,cdi v v v u xu b b u.
Custoers: Uk cdi, u u v w- (86 u) k w v. i ,-b u (14 u) v v.e u , , xu. cdi,
, v w-, xu .5
Sustainability: u v b entirely sel-unding . t k v bw, b u ub. i , u v u- ub, w u w p o wk.6cdi, , v w
v . K v w bu , k cdi w u u k .
Figure 2: hw u wk
c u ,
, k u bk.t k vu u k vu. t u u ,u qu b v k. a , u b
v , w bk . c uv k v u b, w . t u w u wk.
Assets
Loans
Cash/liquidinvestments
Deposit(members
shares)
Capital/reserves
Income
Interest Grants
Interest
-
=
Costs
Surplus
Liabilities Profits and
losses
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part 4: financial eXclUsion findings 21
when calculating deand or capital in the shortter, e have included both credit unions andpersonal nance CDFIs, u u b v . hwv,hen calculating ho uch capacity-building
investent is required, e ocus on creditunions bu v vub, k b b w u b .
Progress over the past ten yearsh w v -v u; u v b w w.7 i w, w v, u xu b v,bu b .
Substantial progress has been ade toardsaddressing nancial exclusion v . i 2004, iu tk w u b xu. W bu 250 u v, bku u , b bu u u ub xu bk. i u w u ub wu bku b . t w v juv u ub 3.75 2002 1.75 b 2007.8
t w k w , ithregard to exclusion ro baning, ost o theain supply side issues had been addressed,u u b bku (u wk b , u v u u). t w w u, u k kw w bk u u,
w. t tk bu v b xu b u 500 v w u. hwv, u m, b .
The aount o loans to nancially excludedpeople has gron k 100 gw u v b iutk . t u w u cdi k 317,798 b v b - vu u v
k . t j (vu-) w b u.9 t u gw u m 2011, uu b u.
The progress ade in increasing loans tonancially excluded people is short-ter.gw u u bu bu v ub xu . t u
u b b u cdi ( u bw u ) x w .hwv, gw u v -, bu u w bk b u (m 2011), k ub.
The sustainability conundruThe best ay to sustain lending is to aethird sector lenders sel-nancing. t
v u bw k u . hwv, b u k v vv u u k 30 400.10 h u u wu 50 apr bk v, bu uu u 10 . t w k v b u b k. W u bk v?s k,bu . i u k u v v.
Soe progress has been ade toards aingthe credit union sector sel-nancing, but a lotreains to be done. s b u b z v (-). Bc U dv a (BcUda) u , ,
400,000, , 240,000 u b b ub ( ax B ).11 mk l, xuv a B c U (aBcUl), u ub. hwv, u 2.4 bk ( 240,000) vub, u u k .
t u w -
u u bw 1997 2008. a, v ub u 596 1997 444 .12 iv b v b w
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part 4: financial eXclUsion findings 22
. t , , u, w 40-50 -vb u v . t b v w b ( 262,000 2002 524,000
2008), ub vu .13t w u b ww uu b ,v u x u.
The challenges or the aordable credit sector inthe next ten yearsW b x ? pv v - x 100 apr, w u 25 apr
. t three illionhouseholds using high-cost doorstep lenders.t iu tk u bw 3 b 14 u b .
W b ? tbk v ub wu bk u b . c w k w u educating nanciallyexcluded people to ae good choices increasing (or at least aintaining) the supplyo aordable credit b gwu. W u .
4.1.2 Overvie o investent optionsou u qu beteen 29 illion and 77 illion v x k vw ub. t :
Sot, sei-coercial capital to lend on:u 36 k xu vu. c u bb v.
Capital to und interediary overheads:7 16 v k w .
Capital to build capacity o the sector:22 25 , xu , v uub u ub(.. ). 7 10
wu u, u 15 wu u c sv o u.
t u u, u u wu bqu u w u.
tb 4 w u qu, w u b vb Bs Bk (BsB). a w, u ( ) ww v w u. ou ju v v, v b (
u uu). n u u w v u , u w b u.
a v w x u v vu , bu v ub w b v . hwv, w bb b u w k , bu v , b u -.W k u u u b v b 2013, w z b 2016/2017.
4.2 modelling deand or capital
Third sector lenders in generalW u u , w u gw u. W u w : -
v v .
Credit unions u, w sa b . W u k j u u 2013, bu w ku. W u w:
Deposits gro at trend: t vu u w 8.5 u 2005 2009. W u
j w u 2013. t b u w . a v w k b k
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part 4: financial eXclUsion findings 23
w u x .15t w .
Loans gro at trend: t vu u w 7.8 u 2005 2009. W u
j w u 2013. m fu w , k v u . W w b u .
u , w u j x ( u 3).
W j w w wu u b .W w u
b :
Liabilities: W u v u b uu vu v.
Table 4: d u
Type o capital
s, - /v
v
c u
v
c bu
au qu*
p BsB
t
ru
au qu*
p
BsB
t
ru
au qu*
p
BsB
t
ru
U 36 v x u k xu vu
U 36
g/ /x
n-b/b v 10-15
lw/ , u wu b k uu
s u (u xu), v
. 7 16 v x v v
b
. 7 16
g
n-b
n , u wu v ( u)
s u (u xu), v
. 22 25 v x v- u (7 10 ) csv o (15 )
. 22 25
mx /
mx -b/b v 5-10
mx w/ () k ub-k (cso).
s u - b ( u xu)
*g k z
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part 4: financial eXclUsion findings 24
Assets: i w bk, b v b b 3.5 , qu 36 x 3.7 bk. t x ,w w u b , ww u bw b. i u , ; ubu u ( tb 6).
Incoe: W u wu b u 2011. s x
gw u uk b u.gv u w vu u w u. t w- , bu bb w w k . W u w bw2005 2009 (9.7 bk). W j qu 3.7 2008 1.5 2009 2013 (v Bk e b ).
Costs: a w bw 2005 2009, u v (6 bk), v (2.4 ), b b v w- (1.7 bk).
4.3 Investent opportunities
4.3.1 Sot capital to lend onwe estiate that third sector lenders could useup to 36 illion o sot capital to ae loans tonancially excluded individuals in the next threeyears. t b u v b iu tk gw u 59 v v . Wv ub w vu u x ( tb 5).
t 59 v b gwu b u, uu . t, k v 12 u . t j(10.4 u) w b u, w b cdi (1.1) u (0.3 ).
lk w, w u u 12 u, w 36 v
x . t gw u vvu u ; k ( 4.3.2).
u 3. t j u
2005 2006 2007 2008 2009 2010 2011 2012 2013
Deposits actual
900
800
700
600
500
400
300
200
100
0
Deposits projected Loans actual
Year
Amountin m
Loans projected
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part 4: financial eXclUsion findings 25
It ay be that credit unions can eet asubstantial aount o this need or capitaltheselves. ou u u qu
- v 2013( tb 6). t bu w j w w v u v , w k u uu buu v v (10-12 ).
Hoever, there are liely to be at least soecredit unions that require sot capital. Wk , uu k u u vu u. ex gw u u u v xu vu u u . t b B s Bk v k u .
For that capital should taeThe capital could either tae the or o a grantor patient capital (e.g. a loan over 10-15 yearsith very lo interest and high appetite orris). pv u u b v ub. t bk
, w uu. t uu, w
v . t wu u v, wu b ub. pv b u v. s
v w v u; BsB u b bu v u w v:
p u v k xu u wu b v ( gw u).
u u b k xu.
n u b -b- b v u u.
u u b k ub, - ub b u.
4.3.2 Capital to und interediary overheads
Deand or revenue unding to eep third sectorlenders lending
Third sector lenders ill probably ace a revenueunding gap o beteen 7 illion and 16illion over the next three years. t wu
Table 5: s v b gw u v
Table 6: uu u
Average annual capital on-lent Aount required over three years
c u 10.4 31.2
cdi 1.1 3.4
hu 0.3 0.9
Total 11.8 35.5
2011 2012 2013
c v 107 105 105
c 12% 11% 10%
c 46 44 45
Please note: c w b u ; w w u v u bk u vb u bw.
tk mt 60
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part 4: financial eXclUsion findings 26
v b v u.t w w b k v -. t c
sv o, , u u u.
The axiu revenue unding needs o lendersis 16 illion; b gw uu. i v , u v 26 v , w ju v 5 u: 23 vu u u (.. ), 3 xu (.. it). a w b ub x ( 4.1.1), u k, v ub v x .
Credit unions alone (reoving other thirdsector lenders) ill ace a revenue undinggap o beteen 5 illion and 14 illion. ou u u w v 5 v x ,w wu qu u v . hwv, vu u u gw u , vu u
u u b u 14 .
Big Society Ban unding ould have to taethe or o a grant. t u u bv k u
uu b .t u v v uk
uu .t wu b u xu x . t xu u v, BsB u u w w:
p u v k xu u wu b v ( gw u).
o , u b u v k .
u u b k xu.
u u b k ub, - ub b u.
4.3.3 Capital to build capacity o the sector
t w u u w b qu u ub u w . , vu u b - (v w
Table 7: gw u v
Table 8: uu u vu ( u u 0.1 )
Average annual cost o loans Aount required over three years
c u 4.6 13.7
cdi 0.5 1.5
hu 0.1 0.4
Total 5.2 15.6
2011 2012 2013 Total
i 66.3 73.2 81.1
c 69.4 75.0 80.9
suu/ -3.1 () -1.8 () 0.1 (uu) -4.8 (decit)
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part 4: financial eXclUsion findings 27
wu x u). s, bk u , k w u .
maing local credit unions sel-nancingwe estiate that the total cost o aing ostlocal credit unions sel-nancing is beteen 7illion and 10 illion. t wu 90, v (7 ) w(10 ). W wb w u vub u. i , b v bw u w v u. hwv, w w
u bw v uu x () u v qu u v w ub.
W w bw 73,000 ( ) 108,000 (w). i 271 uub u, b u , wu b 90 . t u vu u b w w uk. Bu vu u u u, w uu u wu qu.
W u 271 u -, 444 u UK . t b 2008 uv u 61 u w -.16 W v w u wu k - . i ku u w v u:
m bk v w v u b -.
o v, u wu ub .
a wu k bw w, b v k W m.17
t wu u vu
u , bu k w .
t u u u ax B.
A Central Service Organisation or credit unionsnationidea B c U (aBcUl) c svo u wu k
- v u 15 . W aBcUl w k ,bu u u b u b x,u bk .
t wu v u w u b k po wk 11,500 b, v u w . t, w v vb c sv o, u u w
bk b . t wu b u v w v v b bw, aBcUl x:
i a number o credit unions in Britain shared
one banking platorm it would enable them to
oer shared branching through the Post Ofce
network and each others branches. It would
also allow or a telephone helpline giving
credit unions much longer opening hours and
easy internet access to accounts or those who
were able to use this.
18
W c sv o ?c u UK v w ub . hwv, k w . t vub, u . t wu u xu, v fu . t vu b u, b u -ub ,
xu u. t u k bk u .
ev u w w b w b w bk b , u b v v. B w ( it ) (.. u) u v k k . i 1999, cU uu tk u
w v wub c sv o. a b v u u.19
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part 4: financial eXclUsion findings 28
For that capital should taeFunding or ergers could be provided asa ixture o grant and patient capital (sotloans). t v uk uu . t
j -. i gw u xb m 2011 (w k), u x u w b v . i , vw ub, v xu uk v b b uu w v , w . , bu k w-. s, bu v uu w, u wu
v (b ).
Funding or the Central Service Organisation(CSO), on the other hand, could be provided aspatient capital. t c sv ou uu v x v . t ub v k ub-k b v v ( u b u w a B cU). pv u wu b BsB v u u uu b ub.
4.3.4 who else could help eet the capitalneeds o the sector? u vw k , w v u u b u (bw 29 77 v x ). c v, u bk v
. hwv, v u u u ub k b u u. ou vw bk k u u u, b -( 4.4). hwv, bk uk k v . W BsB u k u u w v .
4.4 Building the ider nancial inclusionaret
t u xuv w u
xu v . h w k bk v ( xuv) w wu bu b :
Ensure that Post Oce plans coe toruition: , wk u c sv o p o wk. s, v b . a, v p o k p o k k u.
Explore potential o interediate loanproducts: gv u k cdi (.. m h )v w.t , 50 60 apr, , bu w .h v v . s u w. o v 50 apr b. s b b u b b, k v . m w u b xu. u vu mh wu b .
mae bans long-ter partners: gvu w u bk u b v . i u w iu tk , ub
bk v u b v u . Bk uu vx (.. v w v ). m bk u b u b xu .
Building nancial capability: a k k kw k b xu. t u 500 v w- u u
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part 4: financial eXclUsion findings 29
m 2011. gv u u v uu w u v (u cz av Buu).
4.5 what ight the Big Society Banachieve?
4.5.1 IpactProviding sot capital (36 illion) and revenueunding (7 illion to 16 illion) ouldhelp third sector lenders to eep lending. tb wu b v xu wu
w . xu wu, u, v v u v u b. t ub wu wu u u v. t iu tk gw u v . i w u k 317,798 ; w , wv v 300,000 xuvu.20 t u 10 ub u ( ). t b gw u w w u . B 2010, v v 59 u k v v ,bu w 137 .21s 1 v v , 2.32 w xu. i w u b ku uu.
The capacity-building investents o 22illion to 25 illion could realistically taethe credit union sector to sustainability in the
next ten years, w ub w x v . pv b v u c svo p o wk wu u u w v bw. a u uv x xuu, u v u u w - (w u v ).
4.5.2 Return on investentFinancial inclusion interventions have a rangeo potential benets. B v bv , vuv b , w
. t k . a vu u u v l(u b v v) 3.3 b
b 26 .22For every 1invested in nancial inclusion interventions, 8as spent in the city econoy.
tu vu v , b u , Vat. i, u u v . Bv , u u w bku , . W wu
w u w b v .
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part 5: financing social hoUsing: lessons for the Big society BanK 30
5.1 The context
s 1988 w u b, bu u b .
s j u u k b u (ha) UK. t u ub ub bu uk w. m u ub v vu. hwv, bu k. t B s Bk (BsB) b v- v u , w v vu v v ub v. B vw k , w u w b k u u b k u w Bk.
5.2 A success story
t w v ha v 30 , w, u . t u u
k ha UK 1988 vu v w eu. t 1988 hua u b w , kha v v w u u k.t ha UK w 2.5 u u v .
t b v x (bu w), b ( ) v
u w ha v v u. U u, bw u 60 b u v 30 .t 40 b
ub u . ha uu 15 b v b v w buv. t uu , bu
w , w u ub u. t x uu w ha u u v qu u u u 80 u 1989 u 40 u . i , ha v b b v u v u.
ub bw u, ha v b b v bw k ubv u k. g, w u.
5.3 Dependence on the state
t u w w . t ha w v ( w) v.dv mu l Qu (l&Q)
b ha - u b v: u, , u b.23 t v ub v wu. hu b w- u , v w , b u vu. g b w v u v u vub . hv vvv bk b k
v ha w v b u w w k, bu ( uw) u v w u ub u b.
PART 5:
FINANCING SOCIAL HOUSING:
LESSONS FOR THE BIG SOCIETYBANk
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part 5: financing social hoUsing: lessons for the Big society BanK 31
5.4 Vulnerability o the odel
t w u kha vub b v v .
ha vulnerable to changes in governentpolicy. ha bw vu w v v x 30 . t vu b v u b, w vw- . c ub ha bw. hu b k w b Uv c b v. i u w u
c w u vu .24 i , w u k u ha bw . su wu bb k u u vx , w b vuu b v. i k k u w , uvu wu bb . s bw, u v v v.
t w k v ha vulnerable to fuctuations in the housingaret. ov w , ha v v ub , uu v v. W u u k 2007, u v x. a uu u : Over the next ew years a lot ohousing associations will be working through
the consequences o having had too much
development risk at the wrong point in the cycle.
t k ha vulnerable to theters o borroing oered by bans. tu w ub ha u b u , k u j . ha v b bw b w . i w w , wu u b u uu. a u u
v w bk v b v ha, b x w . t u bk u v v j
. i ju w (.. ), u u ha .
i u, ha v u u u
v v w u v x k. t wk u b v bk, k- . t, k vub v , , wu u k.
5.5 Lessons or the Big Society Ban
t , v v v w BsB w w :
hu v b b u v , u vu k .
hu bw v ub b ,b w uuu vu. o vu w u v u wu w.
a, u ha v ,u vu u ( u b).
t b k ha b v u/ . p , k.
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part 6: recommendations 32
t B s Bk (BsB) u v , w b u, uu w u. t Bk w v b bu
w v. a k w v b k?o uu w wu - uu? t w .
6.1 Investent options
6.1.1 Social Financea x v b u. i BsB k v k u u , u k. i u v :
maing investents ith coercial or closeto coercial returns. t wu u w u v k, w qub .
Investing patient capital or inial or zeroreturns. t k u
, v w uv.
Provide grants/other support. t wu b v k, .. -bu v, v uv.
t BsB u v w u u , b ,v u b k w v u.
s-u k w , w, u k, vu.
t - bw ub
BsB, w wu v u, bu k, w u w u. s -bw u - . o
BsB w uu.
what ight the BSB achieve?t BsB u vw u u . B v k, u .
hwv, b x u b u, npc w BsB k wu u w. t BsB ju w fxb . Bu w u k, u v.
6.2 Financial exclusion
ou u qu beteen 29 illion and 77 illion v x k vw ub. t
:
Sot, sei-coercial capital to lend on:up to 36 illion o patient capital k xu vu.
Capital to und interediary overheads: 7illion to 16 illion o grant v k w .
Capital to build capacity o the sector: 22illion to 25 illion, as a ixture o grantand patient capital, v uub u ub (.. ). 7 10 wu
PART 6:
RECOmmENDATIONS
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part 6: recommendations 33
u 15 u u csv o u.
t u u,
u u wu bqu u w u.
what ight the BSB achieve?The rst to opportunities (36 illion and 7illion to 16 illion) ould help third sectorlenders to eep lending. t b wu b v xu wu w. t v gw u wu k v 300,000 xu vu, bu 10
ub u ( ). t gw uw v ub , v b u u , bu u .
The capacity-building investents o 22 illionto 25 illion could realistically tae the creditunion sector to sustainability in the next tenyears, w ub v . i v w b w k p o wk, wuv x xu u.
6.3 Iportant considerations or strategyand operations
key ndings ro the research to actor intodecisions
1. The absolute aounts needed ro a underlie BSB total hundreds o illions rather
than billions o pounds.
2. Patient and sot capital is in greater deandthan purely coercial capital.
3. But sot capital does not necessarily eanundisciplined. a u u b w w u bjv.
4. Building the aret is essential, butnancially unrearding.
5. So BSB ill have to thin about the trade-obeteen its on sustainability and aretstrength.
6. There sees to be little appetite or a neinterediary entrant. i x qu .
Other considerations
mk bu:
B b k - ub. t u ub v ub. tu k u. l b k,
.
dv w u w xv , bu u w.
mk v:
t BsB u v u vu w u u b u. au siB uv bu vu, BsB wu u u u .
t BsB u v, v v ub. sub u .
t BsB u b bu v, u, , u wb. npc u u ub siB u u k.
t v:
npc v x k w BsB . t w w x, k b u u b. g w, BsB u v u w u, v u /
w .
t BsB u u k u w v u w u
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part 6: recommendations 34
u.
t u v:
t BsB/v u vw x,
, u u wv k k v v.
t BsB u b v w v v v. i uk v k v, , , u vw .
6.4 Suggestions or urther research orinvestigation
npc u v v w vu w x u.
6.4.1 Social nance
iv cdi v k . npc k cdi qu v, bu u b vub x, u 2010, w vb. i u u u ub cdi u b . a,u cdi wk x ? t cudv a (cda)wu b .
iv w v ,
u x v vu v.
ex vu v , siB. (Vw siB bu x vu w w). npc bv x v vu uu b w.
npc qu w -bu . tu b u b -bu .
t k -. lu b , u , v u.
6.4.2 Financial exclusion
m wk u csv o p owk.
ex bk vu , uu b v x (..probono u v ).
m w (.. m h) b xu . u vu m h wu b .
6.4.3 Further reading
Social nance
Inside Out 2010
cu dv a,nvb 2010.
Evaluation o Community Development Finance
InstitutionsghK, m 2010.
Financing the big societyca Vu, sb 2010.
Response to the Ofce o the Third Sectors
consultation on Social Investment Wholesale
Bank:A consultation on the unctions and designca, ob 2009.
Access to Capital, a briefng paperca Vu, sb 2009.
Financial exclusion
Mainstreaming Financial Inclusion: Planning or
the uture and coping with fnancial pressure:
access to aordable credit iu tk, m 2010.
Breaking through to the uture: The strategic
development o credit unions in Britain, 1998
2008pu J aBcUl, db 2008.
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part 6: recommendations 35
Short Changed: Financial Exclusion a guide or
donors
npc, Ju 2008.
Credit Unions o the Future
tk r hm tu, nvb 1999.
Towards Sustainable Credit Union Development
pu J aBcUl, Ju 1999.
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appendiX a: BacKgroUnd on social finance 36
A.1 Financial products
A.1.1 Products or investorst v u w
v u qu k:
Deposits in bans. a k bk. Bk ub, w , u u, . d b.
Bonds. B b b,bu u ub v ub ubj u. Bu v(, u u) v . iv b b- v w bk w b u. tk b v qu, u u ub (u b u ) k.
Loans. t b - ubw . t v
u, , k vu u, u.
Equity subscription in unlisted copanies.sub u v uu v vu u b B Vu. Bu wu b u w u u qu w. m u u x u v (.. ).av bu k
v. t v qu.
Equity subscription in listed copanies.t w u b
(u), v w w u. i u u w b w b w b k
u u.
Quasi-equity in organisations hichare not copanies, e.g. CICs, charities.g u uu u, b x w uu bu f. i uu b k, u u ub u w b k u u v. i u w w f.
Direct arrangeents ith charities,social enterprises etc. r k. ibu u b u, u .Bu v .
Investents in interediaries theselves.
t bv b v u,bu u u k x w.
Ne products and esoteric instruents. aub u bv. cl b, v 1999, x x uu v v u u b bu w b
u b. tb wu b v u u. t s iB u w v, u v u
APPENDIx A:
BACkGROUND ON SOCIAL FINANCE
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appendiX a: BacKgroUnd on social finance 37
v v u. s u b , .. s z / k, u. NPC believes that ore
products ill be developed over tie.
c v w b v k, v wu u , k v w. Bu w.
A.1.2 Products or investeesiv :
s u- u wk, v v.
s-b uw v v uu j x, v v uv w u.
l- u , .. .
mu - u v, x, -u .
t :
Coercial loans: B b bw bk, . t v b w bw.
Coercial and sei-coercial loans rospecialist lenders: o u c
Bk t. t bk u qu () . s-b u. Bu c Bk wu w qu qu bk. t b w .
Governent nance subsidised: t u v bs iv Bu (siB) v bu v k npc
v 350 b vb u b siB 2008. tu b u30 u ( v bw u), u
70 w v. Bu u w , w u u ( b b ).
Sot loans outside SIB: t vu k w bsiB v, v v. Vu B iu k w, bu vu qu . t cdi k , bu n W e, W m, yk hub, l, . p v bu-v xv, u v ub v
. l b u.i u bv v .
Quasi-equity in charity/CIC sector: tk . t u x uu v uu -k, u v b . i vu v-, uu vb v u u w k.a b v-, w .
Real equity in coercial sector: equv uu u. i b u w u, uuw b w. B Vu w u u /ub; rb bu
.
Esoteric instruents: .. s i B.nw u u bv w k.t qu u s wk s i B 18 b u. o u b v, .. - u . r b v. s u/
vub.
Grants: a . s vb
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appendiX a: BacKgroUnd on social finance 38
v /v wk, .. Ul,w v bu b u.
A.2 Investee aret
npc v k ,bu w w vwbu k u:
Sall organisations need grants to getto rst base v v w .
Bu v - . Ul k , bu u 20,000 . siB k u v b x 1 v v- -bu 27 uu v.
Sall to ediu-sized charity/socialenterprise trying to get beyond rst base vb b , k v . W k 20,000-250,000 -k v x v. iu v bu wk w bu u .m siB u kk 50,000 uw, bu , , uu u. Vu v k. l vb 50,000 uw , bu b -k. l cdi v .
Traditional charities and social enterprises oediu-large size needing oring capitalor governent contracts. t k ww uu v b u. rk w . s (t, cBk, Vu) v . t k u w , bu npc uw k vu u .
Charities and social enterprises needingoring capital to bridge private incoe. a v b u uu u, bu
v u .s w u uuu .
Traditional charity/social enterpriseneeding nancing to develop assets. av b bu bk b u, v b .npc bv bk u . tk b u u w, u v b w .
Social enterprises trying to scale-up itha quasi-coercial proposition. t
b fw u.i k b b u . siB, Vu B iu , b . i k vb v-. hwv, w b u wbu bku k,u w bu x v . i vu uu w v.
Established social enterprises groing.lw-k b u b. h-k uu w v, u . c u v .
Ne ideas, ne vehicles, consortia etc. s u b-kw x
x b u u. hwv,s k uu wk u k u s i B .
A.3 Availability o capital
npc k v , w w w v
, w u w kw .
what happens ith the SIB unds and othergovernent unding ill have consequences or
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appendiX a: BacKgroUnd on social finance 39
the aret. t ub u w siBu:
t - (.. s eiv u (sei) u
; cubu u). s u u.
t uu u. W kw w w 2011, 2012, wu uv.
i u , w b ? Wuubu ,
u u u w v b kv u. Bu , b .
t u ub-k. s w v b u b siBu uu . hwv siB wuu ub-k u w uv b .
siB annuality qu b v. d uk bu uu , u v uu qu w . s b b w v. The heinousness oannuality is one o NPCs ey ndings or theBig Society Ban. It ust avoid being tied toTreasury annuality requireents at all costs.
siB v u u, bu u v k, vv f u w u.o kw npc k uubu w u j, bu uubuu qu v w k . a u vu u vu wu bu u k
siB u.
Bu vu siB- u ( ) v b siBw u .
, v v- u b v, b uu.
Governent has heavily unded the developento the CDFI aret. t 35 u cdi k v k pxu x wx v k, w u v b v. W cdi vb ub? e w u v 74 v cdi.25 t b w ub cdi 80 2006 66 2010.
t cdi u w u77 m 2010, uu b u w j cda. Bu b cdi w u u u . n u w -. s buk u bu 20 .
Trusts and oundations are dipping their toes inthe aret. Bu u v .e b b u 20 u 2007. B 2010 14 w , v u Vu. t tu tu v( qub), w h s c b v uu k -b- b. s sbutu u b v u, .. - u v . t b u k, bu nesta v w w qu u.
tu u 30 b . i ju 5 v w v , 1.5b wu b vb k. Bu u uu bu u w w k k v v . a w w v v qu. s w b
ubj w v u u v u. s u u k , bu buk b u. tu u
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appendiX a: BacKgroUnd on social finance 40
w bu w x u u. i u uu u v wb , w v. s k w b qu.
i, npc wu k bw v b .
Deepening o the ris capital aret ight helpto coax ore players onto the eld. i u k bu wu k 15 u, w b vw w ? i w 10-20 u v , k-
wu b u .
Coercial investors are just that coercial.t w v b uu w k. s w v v k. Bu v w qu v w u.m u w k , u u v bk BVu w v uv .
c k v w wbb.t vu k x qu . i u, u v u u u v w w, v u v. t u B Vu.
U w bk u
bk v, vw v.
Private investors prepared to oer ris capitalare still quite thin on the ground. s b w u, bu uuu v v. npc w u u v , w u b .
tx, u u b b, bu v w v k k x u. i u qu vu k b.
The direct aret (.. v v w v) qu w, buwu u u u b k u
b s; b u b mub g l hu; xb u b cl (w a) . s u b npc Newacilities, new unding ub m 2010.npc wu u vj w w , vqu u v. Bu .
Private individuals are shoing appetite to invest
in ainstrea products ith a social purpose.Bk ; u qu vk b u.
Charities v v w k w-k b u, u b bk. d corporates.
A.4 Investent options
tb 9 v v u k w vw u v u. i uu u -v , u k . t w bw u . W v bu w k w . x, u u, w qu v ?d and.
NB s u , bu w v u w b bw.
A.5 Obstacles to uture groth
Deand or nancenpc qu b uv w k. ou b
, w b.npc v u , v u u vb. t x uubu
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appendiX a: BacKgroUnd on social finance 41
Table 9: sz k v
maret
c
s-
gv-ub
cx -
,qu-qu .
W /k/
v v ub/ub-k
s-
, qu-qu . cdi
l
qu/u
Players
t
bk
c Bk
u b siv
Bu (siB)
NB siB u vb -
Vu,
B iu iv,rb ;
B Vu u. NB
bu
r cdi
rb,
..du Bk
Size 2010
460
bt
50 u bc Bk
t u . 300 350
. 60 k w
(73 /27 )
. 25
u
e . 70
80, bu u w
cdi w u
v bu
n qu:
b -. Bu
w
where doesunding coe ro
u
d, buu qu
gv
p
v:vu,, u
u
gv:
px u;rvu;
gw u;citr, erd bk
tu
u
u
Potential2011-2014
p w 25
bw uu:u 600 700
Wu k w 200 b
. 150 bk
Ukw: u
vuu. siB u vb
/55 60 ,
u >100
gw w
: x
. h v
r
: b u
g w
(20-30 ) bu
.
cdi ux
du u
:
what is needed
n. c
w k
Needs 20 illion
v
suv
u u?Funding gapcould be 50
illion+
i uqu
uuu
cu
u :
v k
5 6
x u
B v bwu
v k
c b
w
npc
u bcda
eu,bu v
u
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appendiX a: BacKgroUnd on social finance 42
cubu w qub u u. s b u b u.
s w kw u b k w u u w . twv 18 .
n vb. cv v Vu v
10 qu. s bb , w u, w vb.
a u b j u b nesta B s Bk.i v 47 qu, v. m 500,000 1 bk w w w w
x u. ou 65 , 18 w u 500,000, bu b w w v wu. npc w u b qu v 30 u qu.
Investee-readinesst b. i k buv w u w u bu , bw, k/w, b v (v.), qu. rb v bv . x, uk qu wu v u u .s v , , wk
qu vu.
i , u bu , b u, k . c u k u x v, u . t uu u. a u wk u u b w b qu u.
W w buu b u(bv b B iu) .
maret
U
qu
e u
/w u
g
( vv )
Players
B Vu
s ;
k ..a (cl);sbu u
u b siB; Ul
Size 2010
. 120
u, v
s :
5 si B;a 11
1999; sbuu vu
siB bv
Ul 3
5
where doesunding coe ro
u ,
bu w bjv
ivu; u
u
B l u
muw
Potential2011-2014
l
bu vu kv
qu, u
Bu u
m u
w : 10 z.s k
u b zb
aw
what needed
h
50illion und
B Vu b b
Seed unding or
products
B v b
n/a
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appendiX a: BacKgroUnd on social finance 43
Processing o deand and supplyt u. b u uub v. m k u k
b. , B Vu wk. i , u wk 3 1980? Bu u u?Vu w u b, u u uubu w.
p wv. W v w bw , ku. t k k
k w vbu u b b . a u v w v , , k.
Tax, regulations, and legal structuresg npc legal, tax,and regulatory environent can inhibit theinvestent environent. s wbu v w x, u fxb w u u u . tx bk vu w , uu wk w.
u u, u. hwv, b qu-qu u, u rb v bw v u uu. a qu k b b w u.
npc v w
qu v x, u . Bu w u u b k , w u qu x.
Returnsru w f k v .npc w w v k k , b v v.
W u u u. cu bu u u k. i w u,
wu b u . t wu quz . a uu w v ?
A.6 what else needs to happen to build asocial nance aret?
Bu k u ju v . t v, bu u.
c-bu v b
v-:
/v .
ab -u .
dv u w v w v:
s.
rk/w .
iv v v:
l uu.
tx v.
ru u.
iv u:
dv v k v .
r v u u.
dv k k.
eu u u w.
pu bk bkb .
i u b :
i v b u.
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appendiX a: BacKgroUnd on social finance 44
i u v u/-u v ? iu ?
a k , , v successulnancial product k v .u 4 w .
o x s i B. u w v (w u wk) w b bu u w k v u.
c v w b
v k, v wu u , k v w. Bu w.
t BsB w v k.
A.7 Deal sizes oered by interediaries
i z v , bu z . t w w u, u v. t u k b. tb 10 w v.
tb 11 u vb u b z. nB v, uw b b bv x b. s w v v vb u, v uv b .
s u-z bk v .
Figure 4: s u v
Developidea intoapproachto pilot
12-24 months 1-5 years
Time
1-5 years
Pilotapproach
Introduce tocommercialmarket
Developand growinvestment
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appendiX a: BacKgroUnd on social finance 46
Table 11: avb u b z
Deal size
sub 20k
20-50k
50-500k
500k +
Available todra 2010,
3.0
[40-45]
[150-160]
[90-100]
Serviced by
Ul
Vu, cdi, b sei
sei v
cdi k
c qu , bu b qu
t, c Bk, B iu, cdi, sei, Vu, BVu eu u
m : k / vb w
, sei
B Vu, rb, sei, s , t, c Bk.h x k
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appendiX B: financial eXclUsion 47
B.4 Investent opportunities
merger calculations , b v w
aBcUl u, w v w wu b qu . t w k v (.. v j ). W u w u wu w , .
APPENDIx B:
FINANCIAL ExCLUSION
Table 12: ck: W qu u ?
Ite Total cost one year Total cost to years
c j 30,000 60,000
ex ub- 2,000 4,000
c u 10,000 10,000
tv 2,000 4,000
hr u 8,500 8,500
u
mb 1,000 2,000
nw k b 1,000 1,000
s 2,160 2,160
c 16,166 16,166
Total cost (one erger) 72,826 107,826
Total cost (90 ergers) 6,574,731 9,734,531
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appendiX c: interVieWees 48
APPENDIx C:
INTERVIEwEES
Organisation Intervieee
Social Finance
c Bk r o
s iv Bk su p
s e s
B Vu m g
Vu e g
t c m & Bv W
U J Jk
rb gbk mk m
s e c c J
B iu iv s & e s
cu dv a (cda) B m
Financial exclusion
sa B p
a B c U (aBcUl) mk l
B r s
tb h/transact c hb
Social housing
n hu gv s
t sv au g rw
Trusts & Foundations
e b d s
sbu cb tu (sct) V hb
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1. s iv tk (2010) s iv t y o. t s iv tk a 2010 x 4-5. i , wv, c Bk b bk 2002.
2. J.p. m gb r w rk u (nvb 2010) i iv: a . nw yk: J.p.m gb r t rk u.
3. aBcUl v u, w b sa u .
4. u bk u : sa (m 2010) a Qu s u b v cQ.
l: sa. cdi u : cda (2010) i ou 2010 t s cu dv . l: cda.
5. J, p. (2008) Bk u uu: t v u B, 1998 2008. i r su.r U iu, lv J m Uv, b w a B c U l.lv: lv J m Uv.
6. aBcUl (2010) c U p o. m: aBcUl.
7. J, p. (2008) Bk u uu: t v u B, 1998 2008. i r su.r U iu, lv J m Uv b w a B c U l.lv: lv J m Uv.
8. iu tk (m 2010) m u: m bk. l: iu tk .
9. s gw u dWp wb-, ://www.w.v.uk/-/-w-u//
10. J, p. (2008) Bk u uu: t v u B 1998 2008. r U iu, lv J m Uv b w a B c U l. lv: lv J mUv.
11. ib.12. s: ://www.bu.//.
13. J, p. (2008) Bk u uu: t v u B 1998 2008. r U iu, lv J m Uv b w a B c U l. lv: lv J mUv.
14. ax a iu tk (m 2010) m iu p uu w u: b . l: iu tk .
15. aBcUl (2010) lv c c U. p B. m: aBcUl.
16. J, p. (2008) Bk u uu: t v u B, 1998 2008. r U iu, lv J m Uv b w a B c U l. lv: lv J mUv.
17. J, p. (2005) c w W m u ub c U: a a r pj. aBcUl bw lv J m Uv. m: aBcUl.
18. aBcUl (2010) c U p o. p B. m: aBcUl.
19. hm tu (1999) c U uu: tk r. l: hm tu.20. t u u nvb 2010. t b u ub b d Wk p, :
://www.w.v.uk/-/-w-u//.
21. t u u sb 2010. t w v b d Wk p.
22. Uv s l c cu yk w (2009) iu iv e : t l. l: l c cu.
23. puk, a. (Ju 2010) hu a e uu Vu o. l: t B u.
24. n hu (ob 2010) B cv s rvw a B n hu mb.l: n hu .
25. cda u 2010 i ou db 13 2010.
ENDNOTES
endnotes 49
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