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ANALYSIS OF EVIDENCE FOR LOCAL IMPACT FUNDS Executive Summary
EXECUTIVE SUMMARY This report presents the findings of a research exercise undertaken by Social Investment Business (SIB) to better understand the potential demand for social investment in Local Enterprise Partnership (LEP) areas across England and make recommendations for how Local Impact Funds (LIFs) could potentially meet unmet demand for local social investment. The results have been gathered mainly from two sources: •
SIB’s historical investments
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SIB’s Future Financing & Support Needs survey
The research provides solid evidence of how historically there has been a strong demand for grant support and social investment across LEP areas and highlights the significant funding gap for charities and social enterprises across the LEPs. Our research comprises data collected from five main funds that have been managed by SIB. It is one of the most comprehensive studies on the state of the sector that has been done with evidence of over 1,200 charities and social enterprises taking on over £300 million of social investment and / or grant support. Our research indicates that there are significant levels of social investment activity, especially in the larger city region LEP areas, such as of London, Greater Manchester and the Liverpool City Region.
Based on our research we found that:
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Charities and social enterprises work primarily in physical, mental health and healthy living (28%) followed by education and learning skills (23%) and employment and training (14%).
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The main beneficiary groups are children, young people and families (23%) followed by the general public or community (23%) and people with disabilities (15%).
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Charities and social enterprises tend to work in the most socially deprived areas.
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There has been a significant demand for unsecured loans of less than £250,000.
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The median average size of loans was £141,270.
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The average repayment terms for loans less than £250,000 was 8 years.
Based on our survey and latest data collected from 411 respondents, we found that: •
Charities and social enterprises tend to have a small geographic reach, mainly serving their local area or community.
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There is an increasing interest in social investment, with 87% of respondents indicating they would consider taking on investment, mainly to grow an existing business and to start a new project.
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The main barrier to growth cited by most charities and social enterprises is having difficulty accessing finance.
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There is an existing demand for smaller loans of less than £250,000, with 74% of respondents indicating they are seeking loans of less than £500,000 out of which 53% indicated they sought for a loan of less than £100,000.
SIB has been at the centre of the social investment movement for the last 12 years helping charities and social enterprises working in communities and deprived areas. SIB has developed Local Impact Funds as a new financial product that will help leverage inward investment into local areas. LIFs are a local social investment fund product that provide appropriate and tailored support and finance to charities and social enterprises in a local community. Our research shows that each LEP area requires different levels of funding and would benefit from their own distinct investment priorities and focus, and LIFs can help meet this need as a flexible, off the shelf product that LEPs can engage with and align to their broader economic and social objectives.
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Find out more at sibgroup.org.uk
call us on 020 7842 7788 email enquiries@sibgroup.org.uk visit www.sibgroup.org.uk twitter @TheSocialInvest 1st Floor, Derbyshire House, St Chad’s Street, London, WC1H 8AG 020 7842 7700 info@sibgroup.org.uk
Author: The SIB Group Published: February 2015