This presentation is from a workshop at the NCVO Funding Conference 2014, sponsored by Charity Bank. This workshop will give you an understanding of the steps you can take to get your organisation ready to receive social investment. Presenters: Paul Davis, Charity Bank and Olof Williamson, NCVO. Find out more about the NCVO Funding Conference 2014: http://www.ncvo.org.uk/training-and-events/funding-conference Find out more about the funding resources provided by NCVO: http://www.ncvo.org.uk/practical-support/funding

1. Paul Davis: Charity Bank
Olof Williamson: NCVO
Sponsored by:
Getting Ready for Social
Investment

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Paul Davis
• Regional Director of Charity Bank, covering London
and the South
• 20 years’ experience lending to businesses and now
using that experience in the third sector.
• 10 years as treasurer of a local charity with revenues
of about £100k pa and over £1m raised in grants.
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Charity Bank
Our vision - A world where social purpose organisations
have the financial resources they need to create a
better society for all.
Our mission - To attract share capital from social
investors, take savings from socially conscious
individuals and lend solely to social purpose
organisations, and, as a result, be the most admired
bank in the UK.
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Charity Bank
Established in 2002
Takes deposits from anyone
Lends only to charities, social enterprises and
community groups
More than a 1,000 loans so far
Lends from £50,000 to £2,000,000 for up to 25 years
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Are social enterprises new?
A business model made of chocolate
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The Cadburys’ objectives
Reduce poverty
Treat people fairly
Run a successful business
(Sounds like a social
enterprise to me!)
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What is a social enterprise?
There’s no legal definition…but the Government seems
to go with…
An organisation that applies commercial strategies to
maximize improvements in human and environmental
well-being, rather than maximizing profits for external
shareholders.
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What is social investment?
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Capital that gives social sector organisations the
capacity to deliver returns
Capital: money invested
Capacity to deliver: enables fruitful activity
Returns: to the investor

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Is there anybody out there?
No data currently exists on the overall stock of social
investment
But…probably
£150m invested in 2011
£200m invested in 2012
Not a huge figure, but it is going the right way
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Is there anybody out there?
Finance gap according to NESTA £300m
Finance gap according to CDFA £1,000m
So if £200k was invested in 2012, there is something
like £1 of investment available for every £4 demanded
So you had better look like you are in the top 25% of
social enterprises!!!
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Who is getting the investment?
The five biggest recipient groups in the BSC report…
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Who are these investors?
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Banks
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Government
But the £350m quoted in the previous slide is from a
few years ago and it has now all but dried up
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Trusts and foundations
Charitable foundations report that, even those with large
endowments, often have small staff teams, which
makes it difficult for them to get involved with social
investment
The Esmée Fairbairn Foundation alone may be
responsible for nearly half of all the social investment
from this source
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Big Society Capital
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Big Society Capital gives only through
Social Investment Financial Intermediaries (SIFIs)
These are listed at
http://www.bigsocietycapital.com/finding-the-right-investment/
And these are probably the best ready source for social
investment

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Otherwise
Universities are leading the way for proactive social
investment in the US. The UK Unis are following, but
you probably need to be in a field that lights their lamps
Institutional investors are the key to scale with $90tn of
capital, but apparently not much appetite
Individual “Angels” again, if you are in a sector that
appeals to them and if you can find them!
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Financial investment
Why do you need to get ready for it?
To present a compelling argument for why the social
investor should put his money with you
To work out what you are prepared to pay
To make sure you have a suitable organisation
This means having a good business plan, which means
you need to do some good planning
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Planning and proving you’ve planned
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“Ike” Eisenhower 1957
Plans are worthless,
but planning is
everything

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Business plans
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Business plans
If you don’t have, maintain and use a business plan
You are not running a business
You are having an adventure
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Business plan light - the teaser
Saves everyone time
Divides investors into two camps:
• This looks right up my street – tell me more and
• Sounds great, but it’s not for me
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Business plan – the full panoply
It proves you have thought about:
• The marketplace you are operating in
• Your products and their place in that market
• The competition
• Pricing and reward/return
• Whether you have the right people
• Your regulatory environment
• What might go wrong
• What might go right
• Everything the investor might think of
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Business plan – the full panoply
At brass tacks level:
• What the investor will get while their money is in
• How sure they can be of getting it back again
You need to show you are a sound business
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Business plan – the full panoply
It must include – Section 1
• A clear front page
• A good index
• An introduction – perhaps re-use the short form
• The proposal – what you want – key terms
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Business plan – the full panoply
It must include – Section 2
• What the organisation does now
• What amazing things the organisation is going to do
once it gets the investor’s money
• What the investor is going to get in return
• The people – who you are – what you know – why
you are just the people for the job
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Business plan – the full panoply
It must include – Section 3
• All the dull stuff at the back:
• Historic accounts, budgets, projections (base case and
stressed),
• Detailed terms for the investment
• Lists of your professional advisers, bank, etc
• Copy of the NDL if appropriate
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Business plan – essentials
• Tell a story – use plenty of pictures
• Keep the narrative part clean and concise
• Stick all the dull facts and figures in the back
• Index it well
• Be prepared to have several versions if you are
approaching different types of investor – the changes
probably only need to be minor
• Be scrupulously honest and realistic but not over
cautious
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Be the right type of organisation (Or at
least know what you need to set up when the
time comes)
A bog standard company (perhaps as a subsidiary)
Can issue shares, loan stock, borrow
Community Interest Company (CIC) limited by shares
Can do anything a purely commercial company can
do (but with some limitations on dividend size)
Anything else
But can probably only borrow
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Prepare to put the hours in
Research
Keep checking developments
Networking
Events
Shoe leather
Chasing up
Have a Plan B
Keep smiling – you are doing good
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Paul Davis
Regional Director – London and the South
pdavis@charitybank.org
07585 808309
The Charity Bank Ltd
194 High Street
Tonbridge
TN9 1BE
01732 774040
www.charitybank.org
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