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A demand side view of social investment: how SASC relaunched the Third Sector Investment Fund
On the 3rd July we announced the relaunch of our £30 million offering as the Third Sector Investment Fund.
Our impact report published earlier this year showcases the first twelve investments we have made. We are proud that we have provided £8 million of funding to such inspiring organisations over the last three years. Of those twelve investments, ten have been made from our £20 million Community Investment Fund. Meanwhile our other offering - a £30 million fund designed to provide flexible capital including unsecured loans to small and medium sized charities across the UK - had made only two investments. It was becoming clear that we needed to refine the offer to have broader appeal.
Every day at SASC we talk to charities and social enterprises across the country about their investment requirements. It became clear to us that we needed to ensure the relaunch reflected the demand side of social investment. We wanted to give VCSEs the opportunity to directly inform some of the fund's features.
So we enlisted the help of Nick Temple at Social Enterprise UK (SEUK). Nick brought together a broad range of organisations for workshops in London and Birmingham. He also interviewed social sector leaders about how social investment could better meet their needs. Nick had in-depth and honest discussions about what he termed ‘the 4 P's’ of the social investment process: product, price, process and portfolio. We heard loud and clear what charities and social enterprises really want from social investment; then thought carefully about how we could integrate the feedback into the design of the relaunched fund.
So what’s changed?
Blink and you’ll miss it - the fund now offers ‘investments’ rather than ‘loans’ – but we think the new name reflects what we heard from the VCSE community. A change in emphasis has seen us enhance the fund’s flexibility. It now offers longer investment periods (up to 15 years); and more risk sharing, for example where repayments reflect the success or otherwise of the organisation or the project. We are now also able to support a broader range of social enterprises that extends beyond charities, CICs and other regulated organisations.
But perhaps the most valuable feedback was about engagement – clear communication, a supportive due diligence process that reflects the capacity of the potential investee. Collaboration, not transaction.
We think the result of Nick’s work was really insightful – so we’ve decided to share it. You can download it from our website here.
In the run up to the relaunch we’ve been implementing the report’s recommendations, and we are already receiving positive feedback from potential investees.
And let’s not forget a big thank you to our investors – The Social Investment Business, Big Society Capital and Santander – for allowing us to make these changes. We know they are as excited as we are that the changes to the fund will mean we can support a greater number of charities and social enterprises to increase their impact.