Charities need to merge more to attract finance, says Jonathan Lewis 3

Finance | Vibeka Mair | 20 Jun 2011

Charities need to do more mergers, acquisitions and resource sharing to make themselves more commercially bankable to lenders, says Jonathan Lewis, outgoing chief executive of Social Investment Business, who is to head an NHS social enterprise spin-off in August.

Lewis, who was discussing ways to increase social investment, told civilsociety.co.uk that charities and social enterprises needed to work very hard to make themselves attractive to commercial funders.

“Last year, according to the Young Foundation, there was half a billion pounds of social investment and 55 billion pounds of commercial investment,” said Lewis.

“If charities and social enterprises are serious about making their society-changing solutions more pervasive, they have to make themselves more attractive to commercial lenders. They can’t expect lenders to come to them. Charities and social enterprise have to think very hard about how to make themselves commercially bankable, so, for example, resource sharing, mergers and acquisitions, that sort of stuff.”

Lewis also said that more money would stimulate the social investment market, along with more companies like 3SC, which worked like Serco and allowed charities and social enterprises to bid for the largest contracts.

Commissioning also had to change, Lewis said:

“Commissioning has to be less like something written by Franz Kafka, and more enquiring and outward-looking, to go and find the best solution. It should not be an extremely complicated maze which only those with the best resources are able to work their way through.”

Lewis, who led Social Investment Business for three and a half years, is leaving to become chief executive of service provider Bromley Healthcare which has broken away from the NHS. Lewis said it is a very natural move:

“I think I am staying within the same world. It is an organisation driven by social purpose. So it’s quite natural move from where I am.”

Directory: The Social Investment Business
Who's Who: Jonathan Lewis

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Pete Stevens
Marketing Manager
GOSS Interactive
21 Jun 2011

In my view there are a couple of areas in which charities can work to make themselves more commercially bankable. One relies on a significant cultural change, the other, a clear leadership giving positive direction.

1. Shared services have been demonstrated by the public sector as being a real alternative for creating efficiencies. In fact the third sector could adopt many of the working methods that several local authorities have pioneered up over the years. An example where significant saving can be made is in sharing a website, hosting and content management system. This approach can help organisations make considerable savings. wwwdorsetforyou.com is a partnership of 7 local authorities that have, since 2004, been sharing share one website, hosting infrastructure and web content management system. The annual savings is £200,000.

2. An alternative method of making efficiency savings within a single organisation is to ensure your work as efficiently as possible online. This includes collecting donations and delivering services online. Online transactions can be 95% cheaper than face-to-face transactions according to SOCITM, and online service delivery can be 90% cheaper according to work carried out by beatbullying.

By adopting either, or bother of these approaches, charities can make themselves more commercially bankable and ultimately more successful.

[Reply]

Gordon Hunter
Director
Lincolnshire Community Foundation
20 Jun 2011

A natural coalition might bring together NESTA, the Social Investment Business and the Community Development Foundation to form a "National Endowment for Science, Technology, Social Investment, Community Development and the Arts". They could attempt to emulate Esmee Fairbairn which, with a tenth of the staff manages twice their combined endowment.

[Reply]

Mahmood Reza
Owner Manager
Pro Active Resolutions
20 Jun 2011

Interesting comments and mergers and partnerships seem to reflect the governments view, Ed Vaizey commentin in 2010 if “…there might be scope to strengthen the sector by more co-ordination or possibly mergers”.

To me the main stages involved will be (a) initial consideration of the merger; (b) a due diligence exercise; (c) managing the merger, a process that is sometimes referred to as ‘change management’

[Reply]

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