SI magazine Autumn 2014

Interview Robin McAlpine, Jimmy Ried Foundation

social, strategic and sustainable investment and innovation

ISSUE 6 // OCTOBER 2014

The No vote

What does it mean for your business and employees in the short term?

Funding

Funding

Leading by Example

We talk to Alastair Davis of SIS

Celia Tennant tells us about the work of Inspiring Scotland

We look at the work of The Peek Project

Innovation Morton Fraser is an outstanding and innovative UK law firm. We work with businesses, the public sector and non-profit organisations, and we act for individuals and families.

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SI magazine October 2014

IN THIS ISSUE page 14

page 18

www.simagazine.co.uk SI magazine is a quarterly digital publication designed to bring together original content which affects business within the third sector at a strategic level such as grant and loan funding, partnerships, social enterprise and efficiencies.

Published by Spectrum Solutions Publisher Andy Crielly publisher@simagazine.co.uk Registered office Spectrum Outsourced Solutions Ltd, Catchpell House, Carpet Lane, Edinburgh, EH6 6SP Editorial ial Content Pete Swift pete@simagazine.co.uk Editorial steering panel Social Enterprise Scotland, Scottish Community Foundation, SCFDG, ACOSVO, Scottish Financial Enterprise, Inspiring Scotland.

2

Quarterly Roundup

4

Lead Feature

Following on from Scotland’s no vote and with uncertainty as to what, if any, significant or positive change is on the way PwC tell us what your business

needs to know in the short term

6

Cover Interview

We talk to Robin McAlpine of the Jimmy Reid Foundation

10 Funding

Alastair Davis talks to us about the work of Social Investment Scotland Celia Tennant gives us an insight into Inspiring Scotland

18 Leading by Example

Advertising Lesley Fraser lesley@simagazine.co.uk

Graphic design TMC Graphics www.tmcgraphics.com

23 Service Directory

The views expressed in SI magazine are those of invited contributors and not necessarily those of Spectrum Solutions.

Spectrum Solutions does not endorse any goods or services advertised or any claims or representations made in any advertisement in SI magagazine, and accepts no liability to any person for loss or damage suffered asa consequence of their responding to, or reliance on, any claim or representation made in advertisements appearing in SI magazine. By responding or placing reliance, readers accept that they do so at their own risk.

The Church of Scotland’s PEEK project shows us how it is helping children in Glasgow’s East End

24 Balancing the Books

Elizabeth Robertson of Morton Fraser tackles the difficult issue of executive pay

26 Annual report directory * all interviews were carried out prior to the referendum.

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Reproduction in whole or part is forbidden without the written consent of the publisher.

1

Welcome!

SI Quarterly Roundup

Welcome to the Autumn Edition of SI Magazine It is safe to say Scotland has had a hectic few months, playing host to the Commonwealth Games, the Ryder Cup and the Independence Referendum. Against this exciting backdrop SI has been speaking to key figures, gauging the reaction on the ground and discussing progress and development in Scotland’s Third Sector.

This issue takes a look at the increasing appetite for enterprise across the sector, featuring discussions with Celia Tennant from Inspiring Scotland and Alastair Davis from Social Investment Scotland. At a time when budgets are stretched and funding is limited, we explore how an enterprising approach can help organisations to create opportunities and maximise social impact.

While there are conflicting views on the referendum outcome, there is a broad consensus that the debate has engaged people on a scale rarely seen in recent political history. While the debate was ultimately hinged on the question of ‘in’ or ‘out’, it also inspired people to consider what was most fundamentally important to them as citizens.

This summer the Jimmy Reid Foundation released their Common Weal publication, a book which explores an alternate vision for Scotland based on a Nordic style social model. In this edition SI speaks to Robin McAlpine, Director of the Reid Foundation about the Common Weal movement and asks how the Third Sector can have a greater impact on the legislative process going forward.

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Commonwealth Games The Commonwealth games were one of the highlights of the summer for many, with success both on and off the podium. Team Scotland achieved its largest medal haul ever with an impressive 53 medals, 19 of which were gold, landing a fourth place finish on the medals table. Keen to leave a legacy which transcended sport, the event was also used to focus the spotlight on charity; over £5m was raised for Unicef following a world–wide appeal during the opening ceremony.

Ice bucket challenge The Ice Bucket Challenge exploded in popularity over recent months, with people nominating one another to dump a bucket of ice water over themselves for charity. While the lengthy procession of nominations provided many hours of entertainment on social media, there has also been massive donations to the lead charity associated with the scheme, with the ALS Association reported to have received $98.2m from 29 July to 28 August.

SI magazine October 2014

POLICY NEWS Water rates exemption for small charities The Scottish Government have announced that charities earning less than £200,000 will gain exemption from water and sewerage charges. There will also be concessions for organisations with an income of £200k- 300k who will receive a 50% discount on rates. The changes will take effect from April 2015.

Parliament evidence session on social enterprise A roundtable evidence session was held to discuss the state of the social enterprise sector in Scotland. The session was held by the Economy, Energy and Tourism Committee and invited participants to highlight areas which might require a review of policy or practice from The Scottish Government. Following the session, the committee passed these comments on to Fergus Ewing MSP, Minister for Energy, Enterprise and Tourism.

The points raised included: • Support for a diverse and active social investment marketplace • An enhanced role for social enterprise networks • Increased support for social enterprise start-ups • Investment in the role of boards in terms of leadership and leadership development • Support available to social enterprises from the enterprise networks • Public procurement procedures which provide opportunities for social enterprises to tender successfully • Specific support for female social entrepreneurs • Longer-term grant funding to act as a catalyst for investment

New legislation designed to help social enterprises and SME’s The Procurement Reform Scotland Act (2014) has now received Royal Assent. The act introduces a general obligation for contracting authorities to use procurement to “improve the economic, social, and environmental wellbeing of the authority’s area, facilitate the involvement of small and medium enterprises, third sector bodies and supported businesses in the process”. Over recent years the size of many public contracts has prohibited small organisations from bidding for work and has therefore excluded many charities and social enterprises from benefiting from local procurement spend. It is hoped the new legislation will help these organisations to tender for public contracts and benefit from the £9 Billion spent annually on public procurement.

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LEAD FEATURE

Scotland has voted No While the referendum may be over, the debate as to the future direction of Scotland continues. Over the past eighteen months PwC has been engaging and working with many organisations on the implications of both independence and devolution, developing an understanding of the issues and their potential impacts. This work involved examining the potential scenarios should Scotland remain part of the UK, but gain greater devolution and enhanced powers to set and deliver fiscal policy.

The Scotland Act 2012 will continue its process of implementation, incorporating any amendments that may flow from further devolved powers. The Scotland Act 2012 itself is the biggest ever transfer of fiscal 4

powers to Scotland with measures such as a new Land and Buildings Transaction Tax and Scottish Landfill Tax being introduced from April 2015 and the Scottish Rate of Income Tax being implemented from April 2016. These changes will have a major impact on all employers and employees in Scotland, including organisations within the Social Enterprise sector, and throughout the UK. In addition, the three main UK political parties have committed to a further package of measures, including further tax-varying powers, control over income tax, elements of welfare and benefits policy.

They jointly pledged on 16 September to deliver ‘extensive powers’ to the Scottish

Parliament and, together with the SNP and Scottish Green party, they have now made their submissions to the Smith Commission, which is tasked with reaching Heads of Agreement on the devolution of further powers by 30th November with a view to having draft legislation in place by the end January 2015.

A key implication for the social enterprise sector, as for any employee or employer, will be the introduction of the Scottish rate of income tax.

SI magazine October 2014

These changes will have a major impact on all employers and employees in Scotland, including organisations within the social enterprise sector, and throughout the UK. How will the changes expected from April 2016 impact my employees?

We also know that there will be no change to income tax allowances which will continue to be determined by the UK Government.

Broadly, an individual will become a Scottish taxpayer from April 2016 if they are resident in the UK for income tax purposes and meet one of the conditions below:

As discussed below, changes to these provisions may arise if further fiscal devolution goes ahead.

•

•

They have a close connection with Scotland based on the location of their sole or main place of residence.

They spend more days in Scotland than in any other part of the UK.

MSP’s, MP’s representing a Scottish Constituency, and MEP’s representing Scotland will automatically be treated as Scottish taxpayers.

How will HMRC determine if an employee is a Scottish taxpayer?

HMRC will be writing to individuals who appear to be Scottish taxpayersbased on information held on their computer system, initially determined by their registered home address. More detailed guidance will be published prior to the introduction of the Scottish Rate of Income Tax (‘SRIT’) to assist employees to identify their main place of residence.

Although there are no fixed Scottish Tax rates at the moment, we do know that the current UK tax rates will be reduced by 10% and the Scottish Parliament will set the new SRIT.

The legislation confirms that a ‘place’ includes a place on board a vessel or other means of transport. More detailed guidance will therefore be required to assist employers and employees, notably those in the oil and gas and transport sectors, to determine which part of the UK those places are deemed to be located (for example, a vessel operating in UK waters). What rate of tax will a Scottish taxpayer pay?

Although there are no fixed Scottish tax rates at the moment, we do know that the current UK tax rates (20%, 40% and 45%) will be reduced by 10% and the Scottish Parliament will set a new SRIT. For example, if the SRIT is 9%, then the Scottish tax rates will be 19%, 39% and 44%.

What income will be subject to Scottish tax?

Non-savings income such as employment income, profits from self-employment, pension and property income will be subject to Scottish income tax.

Savings and dividend income, together with capital gains, will continue to be subject to tax at the appropriate UK tax rates. Income from property located in the UK received by a Scottish taxpayer will be subject to SRIT regardless of where the property is situated.

How will the Scottish rate affect tax on pension contributions?

Scottish taxpayers will continue to receive tax relief on their pension contributions.

For the period between April 2016 and April 2018, current plans are for scheme administrators to continue to operate relief at source as normal i.e. using UK rates, on the basis that HMRC will identify Scottish taxpayers and make any necessary adjustments directly through selfassessment or PAYE coding. After 2018, the pension scheme will claim tax relief at the Scottish rate of income tax.

How will the Scottish tax rate affect tax on pension income?

Pension income (i.e. annuities) will be treated the same as income from employment. If an employee is a Scottish taxpayer, they will pay tax on their pension income at the Scottish rates of income tax.

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INTERVIEW

The Common Weal Project Inequality is a growing problem in the UK: recent reports from The Scottish Government, Trussell Trust, Oxfam and The High Pay Centre have highlighted an increase in the number of children in poverty, an increase on reliance on food banks and an increase in the pay gulf between the highest and lowest earning workers.

Average wages have reduced in real terms over the last 5 years, while the cost of food and energy have increased. Benefits have also seen a marked reduction, leaving many people with squeezed budgets and some of the most vulnerable pushed into poverty. Despite claims by the Coalition that the economic recovery plan has been a success, many of Scotland’s poorest people continue to struggle with the basic cost of living.

The disparity between the richest and the poorest in our communities was a key area of contention for many people involved in the independence debate. While discussion was all too often concerned with currency mandates and oil revenues, there was also a lot of debate, particularly at a grassroots level, which was centred on creating a fairer nation.

This summer the Jimmy Reid Foundation released a Common Weal publication; this was designed as a ‘starting point for discussion’ and explores an alternate vision for the transformation of Scotland based on a Nordic style social model. SI spoke with the Director of the Reid Foundation, Robin McAlpine about the development of the Common Weal movement and their vision for a fairer society.

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SI magazine October 2014

Pete Swift talks to Robin McAlpine, Director, Jimmy Reid Foundation

Who was involved in the development of the Common Weal project?

The project was initiated by the Jimmy Reid Foundation but grew to involve a wide range of contributors including: academics, economists, writers, campaigners and members of the public.

The content has been almost wholly produced externally, so an academic came forward and said “I want to write on energy” or a group of campaigners came forward and said “I want to write about the future of credit unions”. Our job was to take it, shape it and put it in a structured publication.

We were simply knocked back by the level of interest we received; the Reid Foundation had initially planned to have 6 papers, but this quickly grew into 50 papers and we’ve really had to say that we just couldn’t accept any more given our resources. But it’s brilliant to know that there is that level of interest and expertise in Scotland. We really do have great human resources.

What was the thinking behind the establishment of the common weal project ?

We wanted to provide a space for people to contribute to the discussion on what the future of Scotland could be. We had been working on a paper which examined the Nordic model, specifically the potential for Scotland to make a transition to a Nordic style society. The idea was to take this concept and ask how we would really like society to be.

What’s made the project possible is a desire borne from the opportunity to talk about a different future. The issue has been opened wide by the referendum, and we wanted to encourage people to move from neutrality to plurality and contribute to the discussion. Neutrality sounds far too much like ‘we don’t know’. Better to allow a balance of different arguments from one

sector than to do nothing more than pose questions. I think neutrality has probably done harm because organisations have chosen to stand back, and I understand the reasons and the pressures for this, but it has detracted from the debate. We needed a more participatory discussion and that is what we hoped to provide a space for.

What does the alternative vision for Scotland look like, how would it influence society?

We have lived throughout my entire life with four or five flavours of the same political philosophy which is predicated on the idea of conflict. That same neo-liberal philosophy dominates absolutely every aspect of politics in Britain. Create a war of all against all and back the winners. It is madness.

The alternative vision is based on mutualism; to create the circumstances which allow the largest possible number of people to succeed. And we’re not talking about blanket equality or establishing

communism or anything like that, but nor are we saying big supermarkets are the strongest model so let’s allow them to keep shutting down our high streets. We need to find a way of allowing both to succeed - and through mutualism all of us can thrive.

What affect would you expect a Common Weal vision to have on Scotland’s Third Sector and the people they serve?

The Third Sector is so large and diverse that it isn’t easy to give a single answer to that. If we really did create something that looks like a Nordic-style economy and society then there really won’t be the need for some of the emergency poverty relief services from the third sector and in time there would probably be less need for some of what might be called the remedial organisations as everything from diabetes to child abuse ought to decline.

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INTERVIEW

On the other hand, the Nordic model is heavily based around much more selforganisation, much more community-level activity and much less centralised control.

The idea that people should be active and take much more control of their community and society, the idea of real participation and real participatory democracy and the hope for flowering in civic and creative activity is a real vision for a future for the third sector. I’ve heard people talking about the third sector as a ‘sticking plaster’ which is used to patch over the problems in society. That surely can’t be the way forward.

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The publication states that common weal politics are for everyone, how will you engage with people that are apathetic and disillusioned with politics?

Everybody is interested in politics - whether they know it or not. They may not be interested in party politics or parliamentary politics, but they’re interested in the process in how the society in which they live is run.

I don’t think the question is when are we going to engage people, I think it is when are we going to stop pushing them away. If you look at the complexity of policy documents and the way we run politics, it might as well

be written in Latin for all the sense it makes to a lay person. We’ve got a 17th century political system in a 21st century world and that’s the problem because our current model of politics is designed to exclude.

We’ve got to have a great reforming moment, start speaking in simple language, having mechanisms where people can really influence policy, rather than whichever lobbyist has the most cash. If you want people to care about politics then give them a politics they can care about.

SI magazine October 2014

We’ve got to have a great reforming moment, start speaking in simple language, having mechanisms where people really influence policy, rather than whichever lobbyist has the most cash. properly, producing good data. We need real engagement and effective media communication so that we are actually putting our point forward properly. Effective influence doesn’t just try and get individual decisions made in your favour but tries to change the environment so that you have a better chance of winning every time.

People across the Third Sector are sometimes not good at this because they seem scared of taking risks and they’re scared of pulling stunts, so they are effectively scared of the most effective tactics. I always say that if you keep losing then look to your opponents and try and work out why they are winning.

There has been a lot of coverage on the Common Weal following the publication and the recent festival.

Did you think the project would reach this scale and generate so much interest?

What’s happening now is completely beyond my expectation, I never thought this was possible. When we first discussed our ambitions for the project I expected that we would do good work but probably fail to really set an agenda in the timescales we had… but sometimes it’s lovely being wrong.

It’s been an absolute honour to be part of it.

you can find further information at

How can the Third Sector have a greater voice and a greater influence on policy and politics?

www.allofusfirst.org

A lot of civic Scotland is not very good at generating good interest and publicity. The average charity in Scotland – and some are better than others - but the average charity in Scotland hasn’t really managed to get their message across in a way that fundamentally changes public perception.

You mentioned the influence of lobbying and wealth on the political system; how do you propose to counter this adverse influence to enable the transition to a more equal society?

Quite simply, we need to be better. People have to be better about engaging and influencing. I first pointed this out when I was in the voluntary sector; I highlighted that with exceptions we were generally pretty bad at the straightforward practices of political influence - we didn’t do it all that well. If we want to keep pace, we have to do the stuff that good lobbyists do, creating the right environment, evidencing arguments

If you look at the business lobby, they have managed to turn ‘capitalists’ into ‘wealth creators’ and there is now an expectation that society should be grateful for them.

They did this in the space of about 15 years by creating the necessary language, and they changed the perception because they did what works. This does not mean that we all have to turn into corporate lobbyists, but we have to learn the lessons of corporate lobbying and PR. Take the Reid Foundation for example; we get in the media a lot because we know what the practices are. It’s about knowing how to construct stories for the media in a way that creates interest and makes it worth writing about. There’s not just one model, but there’s skills and practices that work and you’ve got to use them.

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FUNDING

Alistair Davis, SIS As public sector budgets across the UK have tightened, the amount of public funding available to Third Sector organisations has diminished. Additionally, with banks implementing more stringent lending requirements, many organisations have experienced difficulty gaining finance from traditional lending sources. This lack of available capital has necessitated the creation of new models of financing for social businesses and charities.

Social Investment Scotland is a social enterprise that works to address this issue by providing loan financing to charities and social enterprises. SI spoke with Alastair Davis, Chief Executive of SIS to discuss the vital role of the organisation and the growing popularity of social investment.

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SI magazine October 2014

Pete Swift talks to Alastair Davis, Chief Executive, Social Investment Scotland

What is the primary role of SIS within the sector?

SIS provide loan finance and other repayable investment to charities and social enterprises, particularly where there is a gap and organisations are unable to access money from either a grant funder or alternative lender such as a bank.

Our central role is to connect capital with communities to drive real measurable improvement. There are two different functions within this, one being to connect organisations to social investment by helping them to attract funding. The second function is to provide this action in reverse, by acting as an intermediary and giving investors a route into the social investment market.

How has the organisation changed & evolved since its initial conception in 2001?

The organisation has changed quite dramatically, although the core purpose and mission of the organisation is still the same.

In 2001 social investment was a very new concept and consequently the activity of SIS was low in terms of loans made per year.

Much of our efforts were directed to policy work and outreach in promoting social investment as a concept.

Since 2009, activity has accelerated in terms of the number of loans issued, with the volume of investments more than doubling in the last 4 years. In the past there has been a lot of scepticism about social investment and SIS, whereas people now look to SIS as being a major funder on the Scottish scene and someone that has started to play a leadership role in the development of the market.

The scepticism you mentioned, was that relating to whether social investment was viable as a concept or whether it would be lucrative for investors?

In the initial days it is my understanding that social investment was seen as a nice idea but was ultimately considered as a fad that would never last. Whilst some of this scepticism does remain, organisations now accept social investment as part of the funding landscape, whereas they would have resisted that 10 years ago. That said, we still have a role to play in helping organisations understand some of the more complex social investment tools and language, such as social impact bonds and the concept of risk capital.

SIS has investment from some of the UKs largest banks; do these investors receive above inflation returns on their investment in the same way they would if they invested elsewhere in the marketplace?

Our corporate investors do receive an interest rate from SIS and are also able to claim an additional amount back through a Community Investment Tax Relief. This relief is equivalent to their investment and increases their return to approximately 6 or 7 %.

Has the willingness for enterprises to embrace social investment been born out of necessity due to the diminishing availability of funds from banks and traditional lenders?

The banking market at the moment is undoubtedly not operating at the levels of the past and may never return to those levels, which creates opportunities for social investors. Changes in the wider landscape, particularly in public sector spending patterns have also meant that social investment has become something

organisations have had to consider. And you would think that is something which is only going to continue as public sector spending continues to change.

Last September SIS launched a five year ‘Framework for Growth’ strategy, what is the main focus of this strategy?

The main focus is increasing the amount of investment that SIS holds and in turn increasing the amount of investment that we are able to make into charities and social enterprises. We’re not attracting investment for the sake of it, it has to be in a way that is relevant and matches the needs of organisations. After all, an investment won’t make any social impact if it just sits in our bank account.

What work will the recent funding from Big Society Capital & Scottish Government enable?

On one hand it enables growth in the marketplace and caters for the increasing demand for SIS capital. But 70% of the fund is for a new risk capital product. All the research from the social investment market place says that what organisations need to allow them to grow is risk capital , and the new investment has allowed us to develop a product specifically for the Scottish marketplace. It also allows us to offer loans of up to £1m for the first time.

How does the process of taking a loan from SIS differ from lending from a bank?

Our approach is a more engaged one and similar to the old fashioned approach of relationship banking, so we have no application forms and we would go and meet with people face to face – regardless of the amount of money that an organisation is looking to borrow. We also work with organisations from a very early stage, and even to signpost them to other sources of 11

FUNDING

Alastair Davis with his team at Social Investment Scotland

finance where social investment would not be appropriate for them. I doubt this is something the mainstream banks would do.

We continue to engage with the organisation for the entire lifespan of the loan on a regular basis. We can also be flexible with organisations that might have difficulty making payments and can adjust loans to help overcome periods of financial difficulty.

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What is the end goal for most of the organisations that approach you - why are they usually seeking a loan?

Upon completion of loan repayment are organisations usually in a stronger and more sustainable position?

Generally, they want to do more of what they are doing, or do more on a bigger scale.

They are prepared to take a risk and do something entrepreneurial because they can see a particular need and know that they can make a difference by taking on additional investment.

Our independent social impact research shows that from the point of taking out the loan organisations would say they are more sustainable. In general, they get more of their revenue from trading, they become less reliant on grants and would say they are better managed because in taking on the risk of investment they have had to improve their own processes.

SI magazine October 2014

What criteria determines whether an SIS loan is suitable for an organisation?

We are ultimately looking for two things: one being the development of sustainable income streams to demonstrate that the investment can be repaid, and also that they can then sustain or increase the delivery of social impact alongside that.

What is the most common reason organisations are turned down for funding?

The most common reason is financial robustness, where an organisation’s finances demonstrate that they would be unable to repay a loan now or in the future.

We try and respond to all enquiries quickly, and let organisations know if an investment is unlikely to be approved, so much so that loan applications are very rarely turned down outright by our credit committee.

How can organisations improve their financial robustness?

There are a wide range of business support and grant finance routes available to help organisations become more enterprising and develop sustainable income streams.

That’s an area where the Scottish Government’s social enterprise programmes are very important. You would hope the organisation would be able to attract business support form Just Enterprise and then perhaps the Enterprise Ready Fund or other forms of charitable support focussed on helping them to become more enterprising.

more enterprising, either by moving from grants to contracts, selling services to the public sector or through retailing directly to the general public. The economic climate has meant that for a lot of organisations to continue to exist they have to think about doing things differently. It has made some organisations re-evaluate the way they operate and reconsider their income mix. We have all sorts of examples of organisations that have made that transition and are now more sustainable as a result.

What are the main barriers to further improvement?

I think there needs to be a greater level of awareness about what social enterprise is.

I’m not sure your average man in the street would be able to explain it or point you in the direction of a social enterprise they were aware of. I think that would also be the case for many corporates and even some Local Authorities. Investment remains an issue, even after the recent funding: demand has exceeded our expectations and we will need to attract more investment if that continues.

Social Investment Scotland: Connecting Capital with Communities Looking for investment?

• • •

SIS offer a range of investment options developed specifically for the Scottish marketplace Will engage with organisations from an early stage to discuss and evaluate needs SIS offer an open door and accessible source of information, support and finance

If you would like to get in touch and receive further information contact:

E: enquiries@socialinvestmentscotland.com T: 0131 558 7706

Do you think there is scope for all Third Sector organisations to become ‘more enterprising’ - or are there instances where this is not appropriate?

Not every third sector organisation should be aiming to become a social enterprise, it’s a specific type of business model and there will always be some activity which is delivered on a charitable basis delivering services that have to be free at the point of access.

However, what we do see is a growing number of organisations that can become 13

FUNDING

Viv Sawyers of Street league, William Edgar, Celia Tennant of Inspiring Scotland, John Swinney, Cabinet Secretary for Finance and Sustainable Growth and Professor Niall Lothian

Inspiring Scotland marks five years of Social impact 14

SI magazine October 2014

Inspiring Scotland was established in 2009 to provide a new way of supporting charities in Scotland. Since inception the organisation has channelled £50m through 100 charitable bodies and has impacted the lives of an estimated 60,000 people.

Inspiring Scotland operates on an outcomefocused, venture philanthropy basis; raising funds from investors and using it to provide long term financial support to a carefully tailored portfolio of charitable partners.

In addition to financial assistance, organisations receive a range of ongoing support through continuous engagement with a designated Performance Advisor.

This equips charities with the skills and capabilities required to develop their operation, build capacity, improve sustainability and establish a clear strategic direction. By collaborating in this way Inspiring Scotland can help ensure performance is high and that a strong level of ROI is achieved, maximising the social impact which is delivered from financial investment.

The Inspiring Scotland model has received substantial acclaim from Government Ministers, academics and most importantly the charities and the people they support.

“Inspiring Scotland is a unique vehicle for the public, private and voluntary sector to work together to achieve maximum impact for Scotland’s charities.”

John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth

[The Inspiring Scotland model] “is proving to be an innovative and highly effective means of providing more and better social services by strengthening the capacity and networks of third sector organisations.”

Noah Isserman, University of Cambridge

During my time with Street League, I felt as though I learned more than my whole time at school. I gained qualifications I never thought I’d do along with the confidence and support to go on to achieve my biggest dreams.”

William Edgar, one of the people who has benefited from Inspiring Scotland investment through 14:19 Fund Venture Street League

SI asks Inspiring Scotland’s Chief Executive, Celia Tennant about the success of the last 5 years and the organisations plans for the future.

Inspiring Scotland has established a very impressive track record, as evidenced in the recent independent Gates Scholar report.

Why do you think the approach has been so effective at attaining positive outcomes?

Our model is simple: we raise funding from various sources and invest it in selected portfolios of charities, all working to tackle a particular social issue. Alongside the money we provide access to significant development support to help unlock and maximize potential. Put simply, we help support an organisation to be the best they can be so they can do more to help those who really need it.

How does the approach differ from other investment models?

Our approach is very engaged, we sit alongside each organisation we support and the result of this is confidence that money is working as hard as possible and delivering a maximum social return. We use the business principles of venture capital to address social issues and that makes us different from the outset.

How does Inspiring Scotland determine the organisations and projects that will receive funding what criteria or outcomes does the board prioritise?

First of all we understand the issue we are trying to address alongside the difference that funding can make, and we assess an organisation’s ability to deliver against these. We look at lots of different criteria, but one is their ambition and their appetite for a very engaged venture philanthropy approach. Organisations need to understand this and want to build a strong strategic relationship with us. There is also a period of significant due diligence.

In Addition to financial support, in what other ways does Inspiring Scotland support the ambitions of organisations?

We believe it takes more than money to realise ambitions, it requires significant support and access to the right skills, at the right time. Each organisation receives the support of a Performance Advisor, backed by the wider Inspiring Scotland team. There is also access to the skills and support 15

FUNDING

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SI magazine October 2014

from a pool of private sector volunteers providing support in areas such as, legal, business planning, financial modelling, HR, IT or anything else one of our charities need.

We focus on helping to provide long term change, for example, if we can help a charity with new Board members with the right skills for the next three to five years, that can have a much longer lasting impact.

What methods are used to monitor performance?

The designated Performance Advisor will monitor progress and advise on key issues relating to how the investment is spent.

This includes challenging performance and delivery of outcomes, advising on operational and strategic issues and supporting organisational development and growth. In addition, the Performance Advisor carries out detailed quarterly reviews. We use a balanced scorecard approach to report on performance. This rigorous approach means we can drive delivery of outcomes across the portfolio.

We also undertake an annual performance benchmarking exercise to help ensure the overall shape of each fund is as good as possible.

What steps are taken if performance is poor?

If we identify an area of weakness, our first response is always to get round that issue and look at how we can provide support and improve performance. Improvement plans can be put in place if needed and ultimately we can withhold or cease funding.

continue to address inequality by growing our assets based work, which over the past three years has proven to be a really effective model of supporting communities.

In addition, we are ambitious to seek to help support the early years and looked after children agendas.

Noah Isserman’s independent academic report provided a unique insight into Inspiring Scotland’s strategic model, were there any lessons learned or anything that will be changed or adapted as a result of his examination?

We did specifically learn about how our model is used by charities of varying size. While it works effectively supporting organisations of all sizes we can help deliver quite transformative change in small to medium sized organisations specifically.

The study told us that our charities value the non-financial support we provide and it is just as important as the money. The networks we create, both within funds and across Government and business can accelerate opportunities for collaboration, shared learning, informing policy. I think that is helpful, not just for us, but for everyone working to make change.

This study provided one of the largest snapshots of venture philanthropy and it was amazing to think that a Scottish model, only five years old was able to provide this. We learnt a huge amount and not just at the end, the Author, Noah Isserman, provided regular learning opportunities throughout the whole process. What was really helpful was the fact he was able to help bring a global perspective, comparing and contrasting with other models across the globe.

We like to form strong partnerships and we will always explore opportunities to collaborate. A good example of cross sector partnership is our work with charity, Dame Kelly Holmes Trust and BP, in delivering the BP Young leaders Programme which focuses around the commonwealth Games.

The report confirmed that our work helps charities to be more effective delivery organisations with a clearer focus on impact; better impact measurement; better service delivery; and improved management capacity.

We’ve worked with over 100 charities across our funds to-date and we would like to continue to support, and work in partnership with Scotland’s talented and passionate voluntary sector to improve the lives of the country’s most vulnerable people.

How will the role of Inspiring Scotland develop within the Third Sector, are there plans for further collaboration and partnerships?

What are the ambitions for the future: how will Inspiring Scotland build on the work of the last 5 years?

We want to continue to innovate and find new and better ways of tackling difficult social issues and we would like to build on the mature and strategic relationship we have with Government, other key investors and supporters.

We would like to build on our existing work; the 14:19 Fund is just over half way into its ten year life cycle, and we would like to

William Edgar with the Cabinet Secretary 17

LEADING BY EXAMPLE

The PEEK Project 18

SI magazine October 2014

The PEEK Project was established by the Church of Scotland in 2000 in response to calls for greater provision for the local children of Glasgow’s East end. The project was created to combat the limited choices and opportunities which were available in the community and enrich the lives of those growing up in the area. By setting out to listen carefully to young people the PEEK team hoped to understand their aspirations so they could help them achieve their goals and increase their expectations in life.

T

he project places a strong emphasis on play and providing a safe environment for young people to explore new creative opportunities. The broad range of activities PEEK offer are designed to discover skills, develop confidence and build self-esteem, while breaking down barriers of culture, religion and gender. The project encourages young people to utilise these attributes to broaden their horizons and take advantage of newfound opportunities. The project also provides training and support for people who aspire to work with children and young people.

Since its creation PEEK has expanded significantly, growing from a single paid member of staff in 2000 to 14 workers

supported by 67 volunteers and a bank of seasonal staff. The project was originally focussed on children aged 5-12, but now works with young people across a much larger age range from 5 to 25. The geographical reach has also extended, growing from its roots in the East End to other areas of Glasgow and the Central belt.

SI spoke with Melodie Crumlin and Michaela Munro from the PEEK team to learn more about their work with the project.

What has been the impact of the PEEK Project in the local community?

spaces for play and playing outside more often. There has also been a noticeable change in culture, with a reverse in the mind-set of negativity towards young people and a greater appreciation that they can be valuable contributors to our communities.

This has been helped by young people from the area giving up their time to volunteer; over 40% of our team are local and they have established themselves as role models within the community, giving a real community ownership. Their work has continued the cycle of breaking down barriers, providing creative opportunities and encouraging positive choices, in turn this has caused a reduction in anti-social behaviour and crime.

MC: The project has made a significant local impact, with children reclaiming their

Children at the PEEK Project 19

LEADING BY EXAMPLE When you mention that local children are reclaiming their spaces of play, who or what are they reclaiming it from?

MM: Usually these are spaces that are unused or areas which are utilised for a negative use. Sometimes it is land which is deemed to be dangerous by parents or the local authority - it might be an area such as a car park which has become a place where people congregate to drink alcohol or where drug addicts are using that space. So we help the children to reclaim the area for a positive purpose.

How does the project team support young people to reclaim the space?

MM: We support them through supervision and encouragement, so primarily it’s about being there and about being a positive role model. It is also about establishing a link with the local community: sometimes children are given less priority within a community so it’s also about advocating for them and giving the young people a voice.

Additionally, there is work with organisations like Glasgow Community Safety Services, Local Housing Associations and the Police to report crime and anti-social behaviour.

We also help to organise clean- ups and get the young people and the wider community involved. This benefits everyone in the local area by tidying up public spaces and gives the young people a safe place to play.

Is the local community usually receptive to supporting these types of projects?

MM: The initial reaction is often quite sceptical; we don’t live in a society where children are always outside playing, it’s almost considered abnormal now, so the first reaction is often to wonder why the kids are outside playing in the street and why they are making noise. But when we engage with older residents and the parents in the community, people do realise that this is a positive thing and that it is important to give children an opportunity to play. They can see that kids should have the freedom to explore and not be stuck in doors reliant on technology for entertainment. So it’s about engaging with the community as a 20

whole. Once there has been some initial engagement, we do get older people out speaking to the kids about how they used to play when they were younger. Play connects people at all levels, in many respects it’s a universal language.

Everything we do in the community is relational, so the Play Rangers focus on getting people outdoors, involving the parents and encouraging them to speak to each other and start to take ownership and help out. There are clear benefits for the parents as well, because the kids come home and sleep for the full night and this makes it easier for them as parents and improves the home life for the whole family.

They then talk about these benefits with friends and other parents and this extends the reach of the project. It does take time but eventually people get on board and take full ownership for creating local play opportunities, this then leaves the Play Rangers able to move onto another space or another area.

What benefits does involvement in the project have on the young people themselves?

MC: The project provides a wide range of personal benefits, offering new experiences such as their first youth exchange or first taste of a new sport or art form, this helps broaden horizons and build confidence.

These activities are also an ideal way for them to make friends, meet positive role models and inspire one-another. They can also gain qualifications and recognition for their contribution i.e. Saltire awards for volunteering; arts award, dynamic youth, youth achievement and employability. We also see the young people develop a sense of belonging, taking pride in being part of something good that treats young people for who they are.

What are the main challenges and barriers you encounter in you role at peek?

MC: The main challenge is a lack of appropriate funding which leaves us with stretched resources. We have had considerable investment but it is never enough given the number of children we

are working with and the level of need that they have. Many of our funders are happy to give money for programme costs, however we have also got to remember that charities such as ourselves are an employer of people, so we also need funds for back office tasks and administration and that’s becoming increasingly difficult to get. The people on the ground are dealing with some very difficult situations and they need to be supported and equipped to be able to cope with that.

Over the last 12 months there have been significant pots of capital funding available for facilities, but what we do is mostly

SI magazine October 2014

Kids at the PEEK Project benefitting from sport outdoors so we are not really looking for facilities costs. A new community centre isn’t going to solve all the complex problems in a local area, in fact quite often buildings can present a barrier for people. Whereas, we go out into the community and engage with people because that is what works. We don’t wait for them to come to us.

Ultimately, it’s the people who make it , we don’t need shiny new buildings, that money could be better used in other ways. We have a lot of outdoor space here in the East End, and some of it is a bit dilapidated and run down and if we could just have a small bit of investment to clean it up and then get

people from the area alongside projects like ourselves to run things and organise activities. That would make so much more of an impact than one new building and the impact would be more long term.

The length of funding is also a common issue, most of the time funding will only be for 1 or 2 years, whereas it is when you have a longer term investment that change and progress can really be made. So we could really benefit from more long term investment.

Do you think the importance of play is now more widely recognised?

MC: In terms of policy and funding – yes.

We have the first ever National Play Strategy and there seems to be more funding than there once was. In terms of wider social recognition, I think it’s getting there but there is still some work to do; people quite often like to see outcomes straight off when in fact we need to invest in the longer term of play.

We have been working in partnership with Scottish Sports Futures, Inspiring Scotland and the Scottish Government to do the Active Play Initiative pilot. This is focussed 21

LEADING BY EXAMPLE on trying to determine how we build physical literacy in children at a grassroots level and inspire them to have a healthy lifestyle. It is not for the purpose of competitive sport but for encouraging an active and healthy mindset. So through projects like the Active Play Pilot it has been good that we have been involved in a capacity to help inform and influence policy, and these partnerships help us to promote the message about the importance and impact that play can make.

Why did you choose to come and work for PEEK and what do you find most rewarding about the role?

MM: Growing up as a participant in PEEK I know the difference that a project like PEEK can make in a young person’s life, as well as in the overall community. I believe that we can make a lasting difference in someone’s life and that it can have a wider impact through a ripple effect.

MC: When growing up in Castlemilk I was inspired by two people, the first was Agnes Hoey founder of the Glasgow Youth Choir.

She took many young people under her wing and shared her great passion for the arts.

The second was our local youth worker who encouraged me and brought me out of my shell through the arts and play. I always wanted to give those types of experiences to other children and young people, knowing the benefits that it brought me.

MC: The most rewarding part for me is seeing the positive change - seeing a child experience something for the first time which then gives them a thirst for more and this just builds and builds and leads to a ripple effect on those around them.

Changing the world is easy when you start with one person.

22

SI magazine October 2014

SERVICE DIRECTORY

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23

BALANCING THE BOOKS

The Thorny issue of Executive Pay The Committee does not intend to produce a report or guidance on its findings, as its role is only to scrutinize the Charity Commission in regulating English charities.

Nevertheless, the discussions they have had give some insight into the sector’s approach to this matter. A clear message was the desire for transparency about pay levels. MP Robert Halfon, who is a member of the Committee, has publicly called for “a requirement for charity chief executive salaries and perks to go on their website in an easy form, so people can make a decision if the charity is using the money carefully before they donate”.

Elizabeth Robertson, Solicitor, Morton Fraser LLP

C

ontroversy over executive pay is nothing new; we are all used to hearing seemingly endless debates about the remuneration of executives in both the private and public sectors. So, perhaps it is inevitable that the spotlight has now swung round to executives in the third sector. The Telegraph put the sector under the microscope late last year when it reported that the number of executives receiving six-figure salaries at Britain’s 14 leading foreign aid charities had risen by nearly 60 per cent over a three year period.

Now, Save the Children International has been castigated for paying 20 of its top employees six figure salaries while Marie Stopes International has been criticised for paying its highest earner £290,000.

In October, the House of Commons Public Administration Select Committee issued a call for evidence regarding the salaries for chief executives in the charities sector and has since received oral evidence from representatives from across the sector.

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NCVO, the representative body for the sector south of the border, has launched its own executive pay inquiry, which will seek to provide guidelines for charity trustees to take into account when determining executives’ remuneration “in order to stop pay being a media football”. While the results of the inquiry will not be published until the spring, chair Martyn Lewis has already said that it was likely to recommend increased transparency. He suggested that this would include making public not just the amounts paid to executives but also what he calls “in headline terms, the arguments by the remuneration committees on the boards of trustees when they decide on these amounts”. He also suggested that the key information should be easily accessible on a charity’s website “no more than two clicks away from the home page” but went on to say that a cap on salaries was unlikely to be recommended. The Association of Chief Executives’ Good Pay Guide for Charities and Social Enterprise also identifies one of the key factors as the need for transparency, albeit as part of a combination of factors which require to be considered.

It is clear that the recent revelations in the media do not tell the whole story across the sector and, so far, the discussions have primarily focussed on English charities. In fact, research by the Scottish Council of

Voluntary Organisations found that the average salary for chief executive roles advertised on their Goodmoves website had fallen around £5,000 to £44,452 for the financial year 2012/13. While these figures come from only a small sample of Scottish charities, they are still significantly lower than the high salaries being decried in the media. Nevertheless, the reputation of the sector in Scotland has not escaped unblemished. For instance, The Halo Trust which is a Scottish charity hit the headlines recently when it was reported that it funded its chief executive’s four children through some of the UK’s most expensive private schools. The charity has since stated it has amended its remuneration policy.

There can be little doubt that revelations such as these serve to undermine public confidence in charities. Recent research by nfpSynergy found that more than half of the public are opposed to paying trustees, that a third oppose the payment of chief executives at all and that there is widespread confusion about which charity staff are paid. In this environment of confusion, the revelations of salaries which most of us can only dream of being paid out of charitable funds become even more damaging. No doubt many charity trustees will be left looking at their salary bill and worrying if it could be the catalyst for either a public backlash or some scrutiny from the regulator. So, does Scottish charity law help trustees here?

There are no legal rules which directly govern the payment of charity executives and only rarely will a charity’s constitution deal with this. In the absence of any rules, trustees will be (relatively) free to reach their own decisions as to the level of remuneration of executives. However, as with any decision affecting a charity, trustees must be mindful of their duties.

This means trustees of Scottish charities should act with due care and diligence, in the interests of the charity, in a manner consistent with the charity’s purposes

SI magazine October 2014

and to ensure compliance with law. It’s also worth bearing in mind that when determining whether a Scottish charity provides public benefit, regard should be given to the extent of any ‘private benefit’. In theory at least, this could include excessive remuneration or perks to employees. As a minimum of good practice, the trustees should make sure that discussions on staff remuneration levels are properly minuted and that all relevant factors are taken into account. This might include seeking guidance from professional associations on levels of remuneration, benchmarking remuneration against other

similar charities and roles, and developing a remuneration policy.

Sadly, even doing all this may not be enough to avoid public censure. Unfortunately, the public tend only to see the headline figures and not the reasoning behind them. At first glance, the figures might seem surprising but they could be entirely justifiable in the context of the field in which the charity in question operates and the decision-making process of the trustees. It is this which has led much of the discussions south of the border to focus on transparency because, if the public is made aware of both the levels

of remuneration and the reasons that the trustees believe those levels are justified, then the hope is that the reputation of the sector can be maintained. With reputation in mind, charity trustees should think now about what they pay their staff, how those levels were arrived at and how well their decisions may stand up to any scrutiny in the future.

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