Futurebuilders, the social investment fund launched in 2004 to help charities and social enterprises deliver public services, has seen 50% of the original investment paid back. But what does this mean for social investment today?
We have managed Futurebuilders since 2009. I was here when we started managing the fund and in that time we have given out £117m in loans and £28m in grants. Since the fund closed for new business in 2010 we’ve continued to manage the portfolio and work closely with the organisations who have borrowed money and are paying it back.
Imagine you managed a charity or social enterprise in 2007 and took on a Futurebuilders loan. You may have had 10 years to repay something that helped you transform your organisation. Like the rest of the world, you didn’t know what type of changes were around the corner.
The economic crisis. Increased austerity. Cuts to local government. All of these things have changed the landscape. And Futurebuilders has been there through all of them. We have worked with many organisations to get through tough times so that they can make an impact and do more of what they do best while continuing to pay back their original loans.
A good example of this is Streetscene, a drug and alcohol rehabilitation charity. Founded in 1989, they care to those suffering from addiction or eating disorders from three properties in Bournemouth and Southampton.
In 2006 they received a Futurebuilders loan of £396,500 and a grant of £15,000 to part-finance a new property. Like many organisations, they’ve had their ups and downs but they have now repaid their original investment after refinancing the original loan.
We see refinancing as a great outcome. A lot of the organisations that borrowed money from us were seen as ‘unbankable’. Now they have a track record and can go to more mainstream lenders and get what they need. Social investment becomes normal investment. That’s what we want to see.
Now Futurebuilders wasn’t perfect. The Boston Consulting Group report from two years ago highlighted the lessons that needed to be learnt. No fund today would launch without a clear set of objectives or social impact measures it wanted to see. And obviously some of the money has been lost - about £8m so far.
However, seen as a trailblazer for future programmes and providing the learning needed for future programmes it's been invaluable. It’s not unfair to say that without Futurebuilders we may not have Big Society Capital now.
The returns from Futurebuilders are now being used to fund new programmes, for example Access' Reach Fund . The money has been used once and is now being recycled – just as social investment should be. However, it is more than just money that is being recycled.
I see the overriding lesson of Futurebuilders as one of simplicity & relevance. Futurebuilders offered a mix of grant and loan on simple terms because that's what charities and social enterprises wanted. I now see history repeating itself as this ‘blended finance’ model is being talked of more as the best way to help charities and social enterprises access the investment we need.
I’m delighted we’re recycling the Futurebuilders money for new projects, but I’m also happy that we’re recycling good ideas.