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Local Impact Funds to provide a new kind of finance for charities and social enterprises

A new model that promises to provide simple finance for local charities and social enterprises was launched at a fringe event hosted by the Social Investment Forum at the Liberal Democrat party conference yesterday evening

The Local Impact Fund model is outlined in a prospectus published by the Social Investment Business Group called "Growing a local social economy". The publication highlights the economic and employment benefits of supporting the local sector, in addition to the social impact. It also shows how a locally led solution to social investment will target resources where they are needed most. 

Local Impact Funds will be led by local sector bodies and will bring together local and national partners and investors to provide tailored support for charities and social enterprises throughout their investment journey; from investment readiness support and mentoring to help them to develop their business plans, to loans and other investment products to help them scale up, develop assets and grow. 

The funds are designed in a way to work closely with Local Enterprise Partnerships (LEPs) so that EU funds, which the LEPs will be in charge of distributing from 2014, could potentially form part of the investment mix. Local Impact Funds are being tested as a future recognised Financial Engineering Instrument (FEI) by the government and have been included in official guidance to LEPs as they develop their strategies for using EU monies from next year. 

Other investors can include national investors like the SIB Group and Big Society Capital, along with local investors like CDFIs, local authorities, community foundations and individuals. This mix of investors will allow the funds to meet the needs of the local sector by providing early stage support, as well as smaller loans with a high appetite for risk. 

A broad partnership of local and national organisations have joined together to support the initiative. 

Jonathan Jenkins, Chief Executive of the Social Investment Business Group said:

“We are so serious about the value that Local Impact Funds can bring, that we are committing to invest up to £2 million in support two Local Impact Funds this year.” 

Cliff Prior, Chief Executive of UnLtd said:

“UnLtd is really excited by the potential that Local Impact Funds have for helping to build an ecosystem of finance and support in communities. UnLtd is committed to working closely with Social Investment Business Group to ensure that we direct our expertise and support for strategic, wrap around solutions to growing social entrepreneurship in the UK, from start-up through incubation and investment readiness to achieving their full potential.”

Helen Ryman, Local Development Partnership Manager at UnLtd added, “”UnLtd delivers in many local areas, working alongside partners to promoting an ‘eco-system of support’ that makes it easier for the entrepreneur to find the right help at the right time – essential if the entrepreneur is to make the most of the investment available through their Local Impact Fund.” 

Social enterprises, charities and the wider social economy now employ over 7% of the UK workforce and are significant drivers of economic growth in local areas by creating more jobs and more effective public service supply chains. Recent figures from RBS and Social Enterprise UK have shown that in the past few years social enterprises have outstripped their SME counterparts for growth. These organisations are starting to play a key role in supporting mainstream economic growth strategies led by LEPs as well as paving the way for a boom in enterprises doing business responsibly.  

The Vine Trust led by Kevin Davis has championed the role of social enterprise zones within LEPs and has recently announced two significant partnerships with Black Country LEP and West England LEP which will help encourage local social entrepreneurs and create new jobs. Kevin said, “Through our ‘economy of together’ campaign our social innovation activity is kick-starting the local economy and increasing employment opportunities, particularly in challenging areas. In recognition of our efforts, the Black Country and West of England LEPs have both created strategic Social Enterprise Cabinets and are pioneering our Social Enterprise Zones and Hubs initiative as an innovative and responsible way of supporting growth and creating jobs.” 

The Local Impact Fund is one of a number of new models of social finance presented at the Social Investment Forum fringe events at the three political party conferences. Speakers include Nick Hurd MP (at Conservatives), Hazel Blears MP (at Labour), Don Foster MP (at the Liberal Democrats), Nick O’Donohoe (Big Society Capital), Sir Stephen Bubb and others including leading journalists, policy makers and social entrepreneurs. 

The prospectus includes endorsements from a range of key stakeholders. 

David Frost, Chair of the LEP Network:

“I am really pleased to see LEPs beginning to engage with the social enterprise movement. Those LEPs that choose to support the establishment of Local Impact Funds in their areas will act as an example of practical ways for working with the social enterprise sector.” 

Minister for Civil Society, Nick Hurd MP:

“I am interested in the opportunity for place based investment to provide communities and social enterprises with the finance they need to build a strong, local economy and create real social benefit. This is a great prospectus by the Social Investment Business Group and I would encourage Local Authorities and Local Enterprise Partnerships to engage with the sector and consider establishing a Local Impact Fund in their area.” 

Ben Hughes, Chief Executive of Community Development Finance Association:

“I welcome the concept of Local Impact Funds as a way of stimulating social investment into social enterprises and communities, serving local needs and helping people in some of the most deprived communities across the country. They’ll compliment investments CDFIs are already making and in so doing will strengthen the growing community finance market at this critical time.”

Ends 

Notes to editors 

For further information or interviews, please contact The Social Investment Business press office: Nandini Das 0207 842 7724 nandini.das@sibgroup.org.uk 

More details on registering for the Party Conference Fringe Events is available at sibgroup.org.uk/news/events/fringe2013 

Place based investment: a prospectus for growing the local social economy is available at sibgroup.org.uk/lif 

Supplementary guidance for LEPs on how to develop their EU Structural and Investment Funds strategy (including Local Impact Funds) is available at www.gov.uk/government/publications/european-structural-and-investment-funds-strategies-supplementary-guidance-to-local-enterprise-partnerships 

The Social Investment Forum is a network for providers of social investment and social finance and is chaired by Social Enterprise UK. The Forum offers its members an opportunity to discuss and debate key policy recommendations and work with government, politicians and other key opinion formers on the development of the market. The Forum is a member of the Social Economy Alliance.
sibgroup.org.uk/socinvforum 

The Social Investment Business Group (SIB Group), the largest social investor in the UK, exists to help social enterprises, charities and community organisations do more of what they do best – supporting people and communities most in need. 

The SIB Group manages the Futurebuilders Fund, Social Action Fund and the Investment and Contract Readiness Fund on behalf of The Office for Civil Society, the Social Enterprise Investment Fund for the Department of Health and the Communitybuilders Fund which was endowed to parent charity the Adventure Capital Fund by the Department for Communities and Local Government.  

We have over 1,300 active investments which range in size and scope from, for example,  £3,600 to help a small organisation bid successfully for a public sector contract, to £6.7million to help a large national charity establish and develop innovative new services for children and young people. 
sibgroup.org.uk    @TheSocialInvest 

UnLtd is the leading provider of support to social entrepreneurs in the UK and offers the largest such network in the world. UnLtd resources hundreds of individuals each year through its core Awards programme. UnLtd operates a unique model by investing directly in individuals and offering a complete package of resources; from Awards of funding, to ongoing advice, networking and practical support unltd.org.uk 

Community Development Finance Association (CDFA) are a trade association that represents community development finance institutions (CDFIs). CDFIs provide loans and support to people who find it difficult to access finance from the commercial banks. CDFIs are sustainable, independent financial institutions that provide capital and support to enable individuals or organisations to develop and create wealth in disadvantaged communities or under-served markets.
cdfa.org.uk 

The Vine Trust Group is a Community Development Trust based in the West Midlands that is actively engaged in economic, environmental and social regeneration, with foundations set firmly within the Christian Faith. See how the Vine Trust are working with Black Country LEP to create a vibrant Social Enterprise Zone that is creating jobs and regenerating the Walsall area. thevinetrust.co.uk