What's keeping social entrepreneurs awake at night?
CAN have recently run a survey seeking to identify barriers to growth for voluntary, community and social enterprise (VCSE) organisations.
So what’s the number one worry that is turning social entrepreneurs into insomniacs? In a word: finance. From 107 VCSE leaders that responded to the survey, 71% reported being concerned or extremely concerned about access to finance to fund both cash flow and growth.
Despite the increasing number of social finance intermediaries and growing interest amongst mainstream lenders and investors in impact investing, 42% of organisations within the £100-£500k turnover bracket said they found it difficult or impossible to access social investment, while 55% of all organisations surveyed said they had the same difficulty accessing traditional lending.
That should make interesting reading for Cliff Prior, chief executive of Big Society Capital, who is soon to publish the results of a survey exploring attitudes towards the organisation. Minister for Civil Society Rob Wilson, who wrote of ambitious plans for social investment in a paper published earlier this year might also find his ears pricking up.
Holly Piper, head of social investment finance intermediary CAF Venturesome, commented that this backed up their own research, which has found that access to affordable finance under £250,000 is one of the biggest challenges faced by social enterprises.
“There’s a responsibility for all providers to work towards there being much greater availability of affordable, repayable finance. Part of the challenge is to better educate funders who, while very positive about the concept of social finance, may need to have more realistic expectations about their financial returns,” Piper commented.
52% of all organisations surveyed said that they find it difficult or impossible to access public sector funding
Further results from the survey seem to cast doubt on the effectiveness of the Social Value Act, which requires public service commissioners to consider wider social or environmental aspects when procuring services. 52% of all organisations surveyed said that they find it difficult or impossible to access public sector funding.
Also causing social entrepreneurs to pace their living room at 3am is the capacity to do the work to address their social mission. With one social entrepreneur describing it as “rather a chicken and egg situation” there is a suggestion that having the money to pay the salaries for the staff required to make an impact is also a concern. 59% expressed concern about staff workload and capacity.
So now that CAN has some answers, what is it going to do about it? The survey was produced in order to inform CAN about how best to service social enterprises buying into its CAN³ offering, which includes subsidised office space and business support for between one and three years. A board meeting happening next week will address the findings.
CAN chief executive Andrew Croft commented: “While some organisations in our sector are thriving, there is still a vacuum, where many are struggling to meet their social objectives while still achieving significant financial and organisational growth. Business advisory support needs to be better, and we need more new, innovative funding streams from social investors and trust and foundations. We hope that CAN³ will help address some of these challenges.”
Photo credit: Alon