Capital for growth: meeting the needs of social enterprises delivering health and care Date: 07.03.16 |Categories: Money Guest Blog from Christine Chang, Senior Director, Investment at Big Society Capital… One in four charities and one in three social enterprises are involved in the provision of health and social care support. In the current environment, the trend for outsourcing will continue, and with austerity there will be increasing pressure for cost savings and driving efficiency. Big Society Capital (BSC) wants to help charities and social enterprises stay competitive. In particular, I wanted to understand the barriers faced by E3M members delivering health and social care services in sustaining and growing their businesses in order to see what areas access to capital could help address. After speaking directly with nine members over the course of the last three months, I convened a roundtable in February with delivery organisations as well as social finance intermediaries; I believed solutions already existed within the social investment marketplace. However, recognising there are gaps, I also wanted to facilitate a frank and open discussion about what BSC should be allocating both in terms of time and capital to deliver for the sector. Six E3M members attended along with Mutual Ventures, Charity Bank, Social and Sustainable Capital (SASC) and Bridges Ventures. The drive towards BIGGER A key challenge identified was that with size of contracts getting larger, it’s becoming difficult for single providers to take on a contract. At the same time many felt that a key opportunity lay in forming partnerships – both in the sense of building consortia for bidding, but also networks to enable sharing of best practice and data to create a more robust evidence-base. So how can social investment help? The Health & Wellbeing Partnership, a consortium of nine organisations with a combined turnover of £30million, presented the solution they’re developing, which advisory organisation Mutual Ventures is supporting. In combination, the partners will be able to provide the entire pathway of care. Also, as a pooled vehicle, they believe they can make the investment case easier for investors by diversifying their risk. As commissioners seemingly seek scale, I’m particularly interested in speaking with others like this partnership delivering in health and social care and exploring whether social investment can be a helpful tool. The cash issue Two key issues for many at the table were the low (sometimes negative) margins on contracts, leading to low reserves, and the short-term nature of contracts, making it difficult to invest, plan and innovate. At the same time however, identifying new income streams and diversifying away from government contracts was seen as a real opportunity. So how can social investment help? Two innovative social investment solutions in development were presented. Social lenders SASC and Charity Bank are working in partnership to offer up to 100% loan finance to purchase, renovate or build property in response to VCSE demand. Separately, SASC has partnered with Power to Change to test a blended capital product (loan / grant mix) for locally-led community businesses across England. Bridges Ventures, a social investor, is developing a new fund that will have the scope to provide long term ‘social equity’ to mission-led enterprises – where the return will be through a share of their surplus rather than fixed interest payments. They believe in the impact value creation by working as a long-term partner alongside providers. Providers were generally positive about the options presented. Both providers and investors acknowledged we felt like we were closer to solutions than we have been previously. BSC has offered to be the first port of call for providers exploring social investment to help map the options available. The people not in the room However, there are some challenges and opportunities that cannot be solved by capital alone. Everyone noted that the missing stakeholders from the room were public sector commissioners. One of the shared objectives of the group was to engage commissioners more strategically, and the importance of approaching commissioners in a more joined up way by social enterprises and social investors. The particular area of opportunity noted seemed to be in the devolution areas where commissioners are seeking solutions and are potentially more open to new models. “Collaboration is key.” I’m hugely grateful to the participants for their open and honest contributions. My personal takeaway from the day was that while it’s hard for providers, and it will continue to get harder in the near term, there is still hope. There is goodwill amongst social enterprises and social investors to work together, driven by their shared passion to help improve the health and well-being of people in the UK. If you’d like to be part of the conversation, please email me at cchang@bigsocietycapital.com.
Capital for growth: meeting the needs of social enterprises delivering health and care Date: 07.03.16 |Categories: Money Guest Blog from Christine Chang, Senior Director, Investment at Big Society Capital… One in four charities and one in three social enterprises are involved in the provision of health and social care support. In the current environment, the trend for outsourcing will continue, and with austerity there will be increasing pressure for cost savings and driving efficiency. Big Society Capital (BSC) wants to help charities and social enterprises stay competitive. In particular, I wanted to understand the barriers faced by E3M members delivering health and social care services in sustaining and growing their businesses in order to see what areas access to capital could help address. After speaking directly with nine members over the course of the last three months, I convened a roundtable in February with delivery organisations as well as social finance intermediaries; I believed solutions already existed within the social investment marketplace. However, recognising there are gaps, I also wanted to facilitate a frank and open discussion about what BSC should be allocating both in terms of time and capital to deliver for the sector. Six E3M members attended along with Mutual Ventures, Charity Bank, Social and Sustainable Capital (SASC) and Bridges Ventures. The drive towards BIGGER A key challenge identified was that with size of contracts getting larger, it’s becoming difficult for single providers to take on a contract. At the same time many felt that a key opportunity lay in forming partnerships – both in the sense of building consortia for bidding, but also networks to enable sharing of best practice and data to create a more robust evidence-base. So how can social investment help? The Health & Wellbeing Partnership, a consortium of nine organisations with a combined turnover of £30million, presented the solution they’re developing, which advisory organisation Mutual Ventures is supporting. In combination, the partners will be able to provide the entire pathway of care. Also, as a pooled vehicle, they believe they can make the investment case easier for investors by diversifying their risk. As commissioners seemingly seek scale, I’m particularly interested in speaking with others like this partnership delivering in health and social care and exploring whether social investment can be a helpful tool. The cash issue Two key issues for many at the table were the low (sometimes negative) margins on contracts, leading to low reserves, and the short-term nature of contracts, making it difficult to invest, plan and innovate. At the same time however, identifying new income streams and diversifying away from government contracts was seen as a real opportunity. So how can social investment help? Two innovative social investment solutions in development were presented. Social lenders SASC and Charity Bank are working in partnership to offer up to 100% loan finance to purchase, renovate or build property in response to VCSE demand. Separately, SASC has partnered with Power to Change to test a blended capital product (loan / grant mix) for locally-led community businesses across England. Bridges Ventures, a social investor, is developing a new fund that will have the scope to provide long term ‘social equity’ to mission-led enterprises – where the return will be through a share of their surplus rather than fixed interest payments. They believe in the impact value creation by working as a long-term partner alongside providers. Providers were generally positive about the options presented. Both providers and investors acknowledged we felt like we were closer to solutions than we have been previously. BSC has offered to be the first port of call for providers exploring social investment to help map the options available. The people not in the room However, there are some challenges and opportunities that cannot be solved by capital alone. Everyone noted that the missing stakeholders from the room were public sector commissioners. One of the shared objectives of the group was to engage commissioners more strategically, and the importance of approaching commissioners in a more joined up way by social enterprises and social investors. The particular area of opportunity noted seemed to be in the devolution areas where commissioners are seeking solutions and are potentially more open to new models. “Collaboration is key.” I’m hugely grateful to the participants for their open and honest contributions. My personal takeaway from the day was that while it’s hard for providers, and it will continue to get harder in the near term, there is still hope. There is goodwill amongst social enterprises and social investors to work together, driven by their shared passion to help improve the health and well-being of people in the UK. If you’d like to be part of the conversation, please email me at cchang@bigsocietycapital.com.