Dear Social Investor,
Leila Baker, Niamh Goggin
It’s been six months since we first published our research on ‘Small Charities and Social Investment’ and we’ve been presenting our findings across the UK at meetings, conferences and workshops. This week, as organisations up and down the country are celebrating the contribution small charities make, we are sharing three key things to take away if you are a social investor.
We wanted to explore charities’ experiences of seeking, securing and managing social investment, so we embarked on in-depth interviews with chief officers and trustees in 25 charities. The organisations we spoke to had a turnover of under £1m and were receiving standard term loans; we chose this group as although they form a significant segment of the market in their own right, their voice is largely absent from policy debate. We wanted to capture the experience of the ‘established’, and largely charitable, voluntary sector.
‘As an investor, you end up focusing on what will get the investment over the line, which can mean you don’t do the stuff that will strengthen the organisation over time’
Three key messages
- Mission driven: It’s not all about scale and impact. Every intervention needs to leave a charity stronger in mission and finance.
- The first part of the social investment road isn’t working: Rather than building a separate infrastructure, social investors need to integrate into existing charity and social enterprise networks, connect with “trusted friends” and “speak charity”.
- Long-term relationships not transactions: Charities need a blend of unrestricted finance in the form of grants as well as loans and for lenders to see survival or keeping going as ‘impact’. What that means is for investors to understand their role alongside other funders/funding – grant makers, commissioners, donors and the public.