Social finance is not just relevant to large London-based charities, says Geetha Rabindrakumar of Big Society Capital.

We often hear that social investment is only of interest to policy makers in Westminster and ex-City bankers – and that social investment is irrelevant for smaller locally run organisations. In meeting organisations around the country over the past few months, I’ve found it really refreshing to see the interest and examples of social investment being used in practice – the insights from these organisations will continue to help to shape our work to increase access to social investment for charities and social enterprises.

Breaking down barriers in Scotland

Social Investment Scotland has been operating for about 10 years now, and has made over 250 investments. And they are getting on with effectively addressing some of criticisms of social finance providers, in very practical ways – factsheets to de-mystify social investment, its terminology and processes, connecting with the sector face to face as much as possible, and even getting rid of application forms.

Far from there being little appetite for social investment from the sector, enquiries for their Social Growth Fund reached £10m in the first 3 months. Here it’s interesting to see that the social enterprises accessing investment are using revenue models from consumers rather than statutory income, as a result of far less outsourcing of public services than in England. For example, the Ayr Gaiety Partnership have recently had a loan approved to refurbish an historic theatre, creating impact through training and employment opportunities as well as its cultural objectives.

Help even where grants are common

In Northern Ireland, availability of grants is greater than in England, and commissioning approaches haven’t shifted significantly from block contracts, and therefore perhaps there is less drive to use social investment.

However, one community organisation CLARE (Creative Local Action Response & Engagement) has taken on a small loan from DERiC CIC (Developing and Empowering Resources in Communities) to help deliver improved community-based social care in Mount Vernon, a deprived area of Belfast.

What’s exciting about this is that CLARE’s model of delivery has caught the imagination of commissioners, who are looking at the potential for a new approach to put the investment model into practice (which would involve sharing of savings with the local community), and are now looking to work with CLARE in other ways to test improvements to health and social care delivery.

SITR outside the South East

It’s obviously very early days for the Social Investment Tax Relief (which provides individuals with tax relief on some investments into charities and social enterprises). But it’s interesting to see that the first few deals using the relief have been in Bristol (FareShare South West, through Resonance’s Bristol focused investment fund), Manchester (FC United of Manchester, the community owned football club, who have raised unsecured loans using SITR as part of a funding package for their new ground), East Midlands and Gloucestershire (two social impact bonds arranged by Triodos supporting youth homelessness projects through the Fair Chance Fund).

Taking the challenge to the commissioners

I was struck by how proactive Exeter CVS have been in engaging local stakeholders including commissioners, local funders and support organisations, to identify the pressing social issues where a new approach is needed, and to consider how local services could be reshaped and what opportunities social investment could present to facilitate this.

For example, they have been working in partnership with the local PCC and CCG to develop a social impact bond (SIB) to reduce alcohol-related hospital admissions related to people with multiple complex needs and domestic violence perpetrators, but through a model intended to allow participation of smaller local charities in service delivery, for whom participation in a SIB might otherwise be out of reach.

There is a recognition here that there is limited value in building awareness and readiness of charities and social enterprises to use social investment if there is no commissioner to purchase relevant services, and the CVS want to help shape the changing market for the local sector. Could there be something here for other infrastructure organisations to consider?

Scaling up successful approaches across the UK

The Together Social Business Group run programmes to support ex-offenders into employment, through programmes and social investment models to purchase and refurbish empty homes. So far, the model has been implemented in Bristol and the Midlands, financed through successful bond issues arranged by Triodos. It’s great to hear that Big Lottery in Scotland are helping to fund the setup of Glasgow Together, which will hopefully also successfully raise investment.

Whilst it’s important that local solutions are developed in response to local need, we also want to see successful models of creating impact through social investment being replicated. The sector’s work in tackling social issues is challenging enough – hopefully better sharing of successful approaches will better influence decision makers and delivery organisations addressing these issues, with social investment playing a role in replication more quickly and on a bigger scale than might otherwise be possible.

Geetha Rabindrakumar is Social Sector Leader at Big Society Capital