Connecting to the social sector: Opportunities for social investment & Economic development in Leicester
CASE, the Co-operative and Social Enterprise Development Agency in Leicester, hosted a session to explore the next steps for impact investing in Leicestershire – the ‘host’ county for this edition of The Gathering. In particular, the discussion considered why the county is currently a ‘cold spot’ for social investment and how repayable finance, public money and philanthropic funding can be maximised to help achieve social change for the people of Leicester and Leicestershire.
Leicester and the East Midlands more generally tends to see lower levels of social investment than other parts of the UK. Through a Connect Fund grant, CASE and Voluntary Action Leicester are looking to change this by strengthening local capacity to advance enterprise development.
There are some familiar reasons why social investment is overlooked by local voluntary, community and social enterprises (VCSEs): many see seeking investment as a far greater challenge than applying for grants; the management of a loan, or even the delivery of a contract in some instances, can feel too risky and a task they have limited capacity to be able to administer.
There is also a perspective that, until recently, the sector could manage from the generous public sector funding available, meaning they didn’t feel the need to challenge themselves or innovate their funding models. Due to the impact of austerity on local government budgets, those organisations have now been forced on a journey to find new funding opportunities – and with that, a shift in their focus from end-user to the needs of other stakeholders.
Given the long-established relationships many VCSEs have with their local authorities, the question was raised as to whether they have an important role to play in helping to develop the pipeline for social investment. Undoubtedly there are ways the unitary authorities can support this process – Leicester, Leicestershire and Rutland Councils could take a more joined-up, strategic approach to contracting with the voluntary sector. They could also consider how to use the limited resource they do have available more creatively, to bring additional social investment in to the area.
But councils also have many other hurdles to clear – grappling with reduced budgets, attempting to move from a reactive standpoint to early intervention and prevention, and deliver statutory services in a modern, efficient and value-for-money way, is no mean feat in a less-than-agile structure that is not set up for quick turnarounds.
From the investors’ point of view, they are ready and willing to invest in Leicestershire – they just need the pipeline to be able to do it. There are already a number of investors VCSEs can choose from and they all have slightly different offers. The investors in the room emphasised the importance of organisations demonstrating social impact – the recommendation was to talk to the investor, they’ll get a better sense of what the impact is for the end-user. It’s also important that organisations have access to the necessary skills – a strong and diverse governing board; a financially savvy contact who can support their investment journey without costing the earth; and in many cases some form of trading history to reassure them there is a model there able to take on investment.
It felt like the many of the key components to take Leicestershire forward already exist – infrastructure organisations looking to upskill the VCSE sector, investors and funders willing to put money in, and local authorities that need to start operating differently to meet the needs of the people. It will be exciting to see how these players come together to enable communities to drive forward change.
• Councils could take a more joined-up, strategic approach to contracting with the voluntary sector.
• They could also consider how to use limited resources more creatively, to bring in additional social investment.
• VCSEs should talk to investors to establish pipeline and clarify impact.
• Potential investees need a strong and diverse governing board; a financially savvy, affordable contact who can support their investment journey; and trading history to prove investment is appropriate.