Social investment – an opportunity to diversify your funding?
By Lara Henderson, Development Manager for Scotland
At CTA, we’re proud to work in partnership with our members to identify and address the challenges they face while delivering essential Community Transport services across the UK.
We’re acutely aware of the volatile funding landscape facing operators in Scotland. Relevant funding opportunities are few and far between, and funding that meets the needs of Community Transport operators is extremely competitive. 26% of Community Transport operators told us they are not confident they will survive the next 3 years.
We want to help operators tackle this in any way we can – and we know that without reliable funding, operators cannot continue delivering the lifeline transport services needed to allow communities across Scotland to thrive. Diversifying income streams and considering new ways of accessing capital are crucial steps Community Transport operators can take towards protecting the sustainability of their services. We encourage this as much as possible, but we’re aware that many Community Transport providers operate at maximum capacity, so finding time to explore new funding or financing streams is challenging.
To help support operators with this, at CTA we engage with funders as much as we can to highlight the needs of the Community Transport sector, and operators can find signposting to funding opportunities on the Funding Support page on our website. In Scotland, we are also hosting a series of Meet the Funders sessions to give members the opportunity to engage directly with funders.
At one of our Meet the Funder events earlier this year, we were joined by Firstport, who shared opportunities available in a funding space which seems to be new territory for much of the sector – social investment. Thank you to Firstport for their support in helping us finalise this resource after their Meet the Funder session.
What is social investment?
Social investment is a form of repayable finance. Where social investment differs from other forms of loan finance, is that while a social investor expects their investment to be paid back, they’re also equally interested in the social, environmental or community benefit which the organisation delivers:
‘Social investment is not a grant or a donation. It is money provided to enable your organisation to generate more income or be more effective: growing your business, putting in place better systems, doing more social good, and repaying the investment in the process’ - Social Enterprise UK
How can social investment work for Community Transport operators?
Social investment is best used to fund projects or organisations with a proven track record, so that investors can feel confident they will see their investment repaid.
In the context of Community Transport, social investment could fund the purchase of a new vehicle for use by an already successful transport service which is ready for expansion. Or, it could finance the staffing costs of a project manager for an existing project.
In summary, in return for their investment, social investors want to see:
- their money repaid (sometimes with interest or a fee)
- evidence of social, environmental or community benefit created using their investment
Who can benefit from social investment?
Many organisations assume that to be eligible for social investment, they need to identify as a social enterprise – but this isn’t always the case. Some investors may only be able to support organisations which are social enterprises, but each investor will have a distinct set of criteria for applicants to follow, but the eligibility requirements can vary. Social enterprises can come in different legal forms but are generally businesses which generate trading revenue and reinvest their profits into a social or environmental purpose. They also usually have an ‘asset lock’ and a ‘mission lock’ baked into their governance. It’s worth keeping in mind that charities can be social enterprises too!
Watch a short video by Social Enterprise Scotland, here, which explains more about what social enterprises are.
Where can I access social investment in Scotland?
Firstport
Firstport provide a range of support to those just starting out on their social enterprise journey through to more established social enterprises who are looking to grow. They do this through providing business support, grant funding and social investment.
Firstport’s social investment offering includes:-
- LaunchMe: an investment readiness programme to help organisations prepare for taking on social investment
- Step Up loans: these are loans from £5,000 up to £30,000 with 0% interest to help social enterprises unlock and sustain growth
- Catalyst loans: Catalyst offers flexible, revenue-based finance for organisations who want to grow their business and impact but have been unable to access other forms of social investment (usually for reasons such as the age, stage or business model of the organisation). Catalyst loans start at £50,000
Firstport, in partnership with Social Investment Scotland, Good Finance and the Ventures Lab, have recently published a Guide to Social Investment, which contains lots of useful information – click here to download a copy.
Social Investment Scotland
Operating for over 25 years, Social Investment Scotland (SIS) is a social enterprise and charity providing loan funding and business support to social enterprises, charities and community groups. SIS’ support offering includes a variety of loan funding opportunities to help communities grow.
Some of their funding opportunities include:
SIS Community Finance Fund
-SIS’ core loan offering, designed to provide flexible, affordable finance to charities and social enterprises across Scotland
-Loans range from £25,001 to £375,000, with the flexibility to consider smaller amounts, the fund includes both term loans and bridging loans
SIS Bridging Loans
-Bridging loans are specifically designed to support social enterprises and charities that have confirmed grant awards paid retrospectively
-They offer short-term cashflow to help you deliver your project on time, with the loan repaid directly from the grant funds once they are received
SIS have more opportunities on their website, including their Scottish Social Growth Fund and Growth Guarantee Scheme, as well as an Investment Readiness Tool to find out if your organisation is ready for social investment. Check out the tool, and other investment opportunities on the SIS website here.
Foundation Scotland
Operating for nearly 30 years, Foundation Scotland work to strengthen communities across Scotland.
Foundation Scotland manage and distribute a wide range of community funds from a variety of Scottish, UK and global sources, including via governments, corporations, businesses, charitable trusts and philanthropists. Some funds are available on a Scotland-wide basis, while others are local or regional. Some funds have broad themes, while others have specific objectives.
You can browse all of their available funding sources here.
For the chance to meet some of these funders and more, join us at our CTA Scotland Conference this year! The conference will take place on Wednesday 9th September in Edinburgh. For more information and to secure your place, visit our website here.
If you have any questions or have had funding success through social investment, we’d love to hear from you! Get in touch with us using scotland@ctauk.org, and sign up for our fortnightly e-newsletter, where we share upcoming events (including Meet the Funders sessions) and new funding opportunities.