As part of the GET INFORMED campaign blog series, Edwin Godfrey - Chairman of Purple shares their journey exploring social investment.
Purple is a not-for-profit organisation bringing disabled people and businesses together. Purple was officially incorporated in June 2016 and was created out of the Essex Coalition of Disabled People (ecdp). The organisation came about because we started thinking differently about disability and we needed a new model for dealing with the issue. People were sitting in their own silos and we wanted to change this. Becoming Purple was about changing the narrative, as well as our governance structure. The idea was about bringing together disabled and non-disabled people to create solutions. This would not have been possible in ecdp alone. We believe that by bringing disabled people and business together we can move the conversation on from one of inequality and vulnerability to one of empowerment and commercial opportunity.
We talk a lot about the Purple Pound – that there are more than 10 million disabled people in the UK who have a combined spending power of £249 billion and tend to be loyal to disabled friendly organisations. Our pitch to business is to start seeing disabled people and their families as a market for your products and services. Generally, once companies see traction with a particular customer segment they start to reflect that customer group in their own workforce. We’re finding that this message is increasingly resonating with companies and businesses who had previously not considered disability as anything more than a CSR issue. We know that to grow Purple, we need to practice what we preach and we see this as a real commercial opportunity. We need to back ourselves to grow a business that can repay an investment. Our view is of ourselves as a microcosm of what we are trying to achieve in terms of disability more broadly.
Social investment became part of the discussion when thinking about Purple’s model and the conversation was really started by our CEO Mike Adams. Historically, ecdp had two or three income streams (funders) and that made the organisation pretty fragile and vulnerable to the decisions of other organisations. We felt that we needed greater diversity of income and we have considerable ambition for a small organisation. As we wanted to develop our business offer we knew, by definition, we should grow our range of income, and investment is one way to achieve this. As our work is about addressing social inequalities, social investment is where we thought we could get investment working with organisations who understand the social aspects of what we are trying to achieve. Social investment sits nicely between the charitable and commercial worlds.
There are a number of advantages to social investment that we can see. You obviously hope that you will work with investors who understand very deeply what you are trying to do and will be focused on impact growth, as well as financial return. You also need investors who are willing to take some risks on that journey and who can provide both financial and non-financial expertise.
The disadvantages, as we see them, are that it would appear that the decision-making and the hoops you need to jump through are considerable. Therefore, there is a choice to be made between going for social investment with all the accompanying hoops and going with individual investors who want to invest in Purple for equity and revenue streams.
We are at a reasonably early stage in our social investment journey and how we think about it going forward will very much depend on the way we decide to take the business. We have a three-year business plan and are focusing on working out the best ways of delivering and accelerating that plan – social investment is one way we are considering raising money. We are currently in the process of exploring our options. We are discussing social investment at board level and exploring all our options. We are not going to rush into anything but we will need to push the go button at some point soon and this will be determined by what is out there.
The reality is that social investment is not going to address short term objectives and it is the compromises in terms of these short term objectives that you need to make to get that traction with social investors. Social investors seem to us to be relatively risk averse and I’m just not sure the decision-making is quick enough, capital investments seem to be quicker. My instinct says that you very quickly get locked into a process with social investment. We’ve also not found that many social investors focusing on disability.As we rapidly develop we will continue to explore social investment as part of a range of investment options but know that decisions, and making timely decisions, become crucial in our increasingly commercial world.
This blog was put together as part of the GET INFORMED campaign offering free practical support, guidance and information to help board members of charities and social enterprises understand the opportunities and risks of social investment. Edwin Godfrey is one of the "faces" of the campaign - board members who have used or considered social investment.