This document summarizes presentations from a trustee conference on social investment. It discusses how social investment can provide charities and social enterprises additional funding beyond traditional donations and contracts. Social investment blends a financial return with a social return. Examples are provided of how London Early Years Foundation and Furnistore have successfully utilized social investment to expand their operations and impact. Trustees must consider the risks but social investment was shown to enable growth and greater benefit to communities.

1. PM6: Social investment for trustees:
what do I need to know
Geetha Rabindrakumar, Big Society Capital
Tim Willis, Chair, London Early Years Foundation
Edward Baker, Chair, Furnistore
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2. Social Investment:
A brief introduction
Geetha Rabindrakumar
Big Society Capital
Social Sector Leader
grabindrakumar@bigsocietycapital.com
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3. The Social Challenge
Charities & social enterprises are dealing with some of the
most challenging issues in the UK
Obesity attainment
Youth
unemployment
Educational
Adoption
Homelessness Reoffending
Ageing
population
Financial
exclusion
Social
isolation
Fragmented
communities
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4. Finance for Dealing with Social Issues
Traditionally their income has come from:
Contracts Donations Bank finance
BUT
A growing number of social sector organisations are now
looking at a more diverse funding model including
repayable finance.
Innovation and
growth
Payment by
Results contracts
Developing
sustainability
TO SUPPORT
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5. 5
What is social investment?
Investment • Financial return
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• Financial return
&
• Social return
Social
investment
Philanthropy • Social return

6. Early considerations
• What do you need investment for?
o Purchasing/refurbishing assets
o Working capital (e.g. to support payments by results
contract)
o Bridging finance (e.g. confirmed grant)
o Expand existing activities/ deliver new services
• Is there an income stream?
• What social impact are you seeking to create?
Organisation Activities Outputs Outcomes Impact
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8. 8
Big Society Capital has been set-up to
accelerate the social investment market
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in the UK
HSBC
Barclays
Lloyds
TSB RBS
Dormant
Accounts
Social
Finance
Providers
(‘intermediaries’)
Other investors seeking
investments that create a
positive social impact and
financial return
Social sector
organisations requiring
capital to allow the
organisation to grow to
scale
£600m capital

9. Why Social Investment?
For your charity, investment can:
• Be more flexible than grants
• Enable charity to direct donation income to where most needed
• Bring business discipline (effectiveness)
• Bring wider support and engagement with your cause
• Bring involvement/expertise from motivated investors
For the sector:
• Recycle money available
• Attract additional funding
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10. • Navigating the social investment landscape – where to start?
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Challenges
• Process to secure investment will take management time (eg due diligence)
• Managing different funding relationships
• Capacity to manage investment
• Demonstrating impact

11. Considerations for Trustees
• Early discussion with management team around pros and cons and Board concerns
• Risk – appetite, identification, management
• Governing documents – can your charity borrow?
• Board responsibility and decision making processes
• Taking advice (eg loan documentation)
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12. • Additional money becoming available to charities?
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How Effective is
Social Investment?
• Sustainability and financial returns?
• Social impact created?

13. Appendix – Slides for Further Information
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14. Social investment to create positive impact for
Vulnerable
parents
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vulnerable groups
General
Public / All
Long-term
unemployed
Homeless
Addiction
issues
Long-term
health
issues, life
threatening
or terminal
illness
Living in
poverty/are
financially
excluded
Learning
disabilities
or mental
health
needs
Physical
disabilities
or sensory
impairment
Vulnerable
young
people and
NEETs
Vulnerable
children
Voluntary
carers
Elderly
(including
those with
dementia)
Ex-offenders
Experienced
crime or
abuse
Outcome Areas
Employment, training
and education
Housing and local
facilities
Income and financial
inclusion
Physical health
Mental health and
well-being
Family, friends and
relationships
Citizenship and
community
Arts, heritage, sport
and faith
Conservation of the
natural environment
Beneficiary
groups
Eg Social
investment into
CPCE
programmes:

15. Social Investment Finance
Investment
Readiness
Social Funds
General funds
Specialised funds
Social Impact Bonds
Social Lenders
Advisers
Intermediaries

16. Other Things to Consider
• Risk understanding and appetite?
• Profile and predictability of payments?
• What level of interest cost could the activity reasonably support?
• Could social investment work alongside bank finance & donations?
• If investing into fundraising/retail – what impact will be created?
• Could the investment be taken on by the trading subsidiary?
• Could your charity offer security?
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17. Social Impact Bonds
Financial risk transfer to investors
Investment into SIB
programme
SIB SPV
Lead delivery charity
Eg: Social Finance -
Investment in services to
reduce loneliness – benefits
of reduced service use and
improved health outcomes
• Pressing social need
• Engaged commissioner
• Complex social outcome to
evidence
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Payments
represent a % of
cost savings
Investors
Commissioner
(e.g. LA)
Delivery programme (could
include peer support, group
activity, CBT for most isolated)
Payment metric:
Reduction in
loneliness
Reduced loneliness

18. Support to prepare for investment
• For social ventures seeking to raise
over £0.5m investment
• Grant (£50k-£150k) to cover cost of
capacity building support
(application joint with advisory firm
– over 35 approved providers)
http://www.beinvestmentready.org.uk
/social-ventures/
Big Potential (new - first half 2014)
• £10m fund over 3 years
• For VCSE organisations seeking to raise up
to £500k investment (or contracts)
• Diagnostic tool assessment to check
whether social investment is a realistic
possibility
• Advisory support (apply jointly with an
approved provider):
- Preliminary grants to build
organisational capability (c£25k)
- Investment plan grants (c£45k)

19. For Reference
• Submit online queries to BSC investment team
http://www.bigsocietycapital.com/ask-us-question
• Grant support to prepare for investment:
Big Potential http://www.sibgroup.org.uk/bigpotential/
ICRF - http://www.beinvestmentready.org.uk/social-ventures/
• Sources of funding currently open:
http://www.bigsocietycapital.com/sources-investment
• Directory of social finance providers and advisers (can filter for specific
requirements):
http://www.bigsocietycapital.com/finding-the-right-investment
• NCVO guide and tool
http://www.fundingcentral.org.uk/Page.aspx?SP=6059
• Big Lottery Guide to social investment
http://www.bigpotential.org.uk/resource/social-investment-guide
– Charities Finance Group event on social investment – 27 November 2014
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20. Social investment for trustees: case study
London Early Years Foundation (LEYF)
Tim Willis
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21. LEYF’s Social Mission
LEYF’s social mission
is to provide high
quality childcare to
children from
disadvantaged
boroughs across
London
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22. LEYF has become the leading childcare
social enterprise in London
• In 2012 LEYF won the O2 National
Business Transformation Award for its
change programme
• Over the last few years, LEYF’s
performance has been exceptional in
key metrics
• LEYF secured funding to develop its
core and grow the business
• LEYF aims to increase its social impact
and reach at least 5,000 children, their
families and communities by 2017
• MBE for CEO in 2013
• LEYF won the Nursery World Nursery
Chain of the Year in 2014
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23. Growth so far
Nursery revenue
(£000)
Number of
children
Average 12% a year growth over the last 6 years

24. Options explored: SWOT
• Strong reputation
• Growing capacity
• Reserves, assets
• Incremental/organic
growth?
• Franchising?
• Opportunities available
• Growth is good!
• Full review with help from
Social Business Trust
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25. The investment
• Advice from ClearlySo
• Loan from Big Issue Invest
and Bridges Ventures
• Bespoke negotiated
repayment arrangements
• Linked to performance
indicators for growth,
revenue and social impact
• Investor board member
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26. What for?
• Capacity at HQ
• Working capital
• Nursery buildings
Leads to
• More nurseries
• More children
• Greater social impact
(via a 4:3:3 model)
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27. Issues for trustees
• The stewardship role, exposure to liabilities
• Working with investment bankers
• No assets, so based on projected future
surpluses (and social impact)
• Very few benchmarks: are the bankers ripping
us off? Can we trust the expertise of our staff?
• Composition of the board
• Philosophical discussions
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28. Language
2011 we spoke of:
• Sustaining the charity
model
• Quality/SROI
• Breaking even
• Building reserves
• Safeguarding
• Occupancy
• Reputation
By 2013 we added:
• Debt servicing
• Profitability
• Exploiting market
opportunities
• A repeatable model
• Brand
• Start-ups/BAU
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29. Experience: negatives
• Casualties
• Floundering about
• Trying to keep attention on BAU
• Stretched relationships to the limit
– Between trustees
– Between trustees and staff
• Is it still our strategy?
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30. Experience: positives
• Capacity for growth
• Deliver more social impact
• Stimulating, challenging
• Improved the quality of information coming to
the board
• Hastened the reshaping of the board and
executive team
• Raised the standard of board discussion
• A sympathetic partner (we hope!)
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31. Overall …
• We began the journey in
2008
• Retained talented and
committed key staff
• Partners helped a great
deal
• Very challenging for
trustees – risk,
stewardship, our personal
contribution
• Outlook is very bright for
LEYF
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32. Ed Baker
Chair of FURNISTORE
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38. The
Issues
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42. Debentures
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49. Is Buying Cheaper
than Renting?
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51. Our Stockholders
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52. Planning for the Future
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53. “Isolation is being by
yourself
Loneliness is not
liking it”
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54. #TRUSTEECONF2014

55. Ed Baker
ed@edwardbaker.orguk
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56. NCVO/BWB Trustee
Conference 2014
Developing exceptional
governance
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