13 July 2011
Social investment products must meet needs of institutional
investors if market is to grow
The City of London Corporation today hosted an event at
Guildhall for an audience of industry stakeholders, institutional
investors, third sector organisations and social finance
intermediaries to mark the launch of - and to outline the findings
contained within - a new piece of research entitled ‘Investor
Perspectives on Social Enterprise Financing.’
The report, jointly commissioned by the City of London
Corporation, City Bridge Trust and the Big Lottery Fund, and
authored by ClearlySo, provides an insight into the attitudes of
different kinds of institutional investors towards social
investment.
Commenting on the report, the Lord Mayor of the City of London,
Michael Bear, commented:
"Time and again, the Coalition Government has made clear the
need to help voluntary and community organisations gain access to
greater amounts of capital at a time when the industry is facing
unprecedented challenges and when the public sector must rein in
its spending.
"The report demonstrates that there is an appetite for such
investment amongst a wide range of institutional investors; this
interest must be now matched by the development of further
financial products to meet the needs of potential investors.
"Whilst there is no ‘one size fits all’ solution, the City has a
highly skilled workforce, capable of tremendous innovation. This
creativity has already helped create a market which invested £190
million in social enterprises in 2010.
"However, there remains much work to be done; I have no doubt
that the report will prove instrumental in helping to bridge the
gap between what investors want and the products designed to raise
capital for social enterprise.
"It is especially timely as attention turns to the potential of
the Big Society Bank, due to be launched later this year."
Nat Sloane, England Committee Chair of the Big Lottery Fund,
added:
"With demand for funding being greater than ever, now is an
important time to look for new ways to bring improvements to
communities, especially ways of attracting investment from outside
the public sector.
"This report provides insight into both opportunities and
obstacles concerning the growth of the social investment market. It
highlights the key role intermediaries have to play in helping
investors and investees meet common aims so that charities and
social enterprises can better access capital for their work with
communities Bringing the players and the finance together will
address need in our society and deliver more change for the
better.
"We hope this report provides some clarity on the issues facing
the complex arena of social investment and a direction for the
strengthening and growth of this developing market."
The research involved 55 interviews with institutional investors
including pension fund managers, banks, private equity firms,
independent financial advisors and charitable foundations and was
supported by a high level group of social finance experts from
institutions such as Deutsche Bank, Coutts, UKSIF and
Venturesome.
It was found that investors are more likely to engage if social
investment can offer:
- An expectation of market or close to market returns
- Some guarantee or mitigation of risk while approaching market
level returns; protection of the downside is more important than
potentially high upside
- Liquidity if possible, which helps reduce perceived risk
- Robust measurement of the social returns generated by the
investment
- Large investment opportunities, eg through pooled funds
- Products and managers with a track record in which City
institutions can develop confidence
Speaking at the event were:
- Michael Bear, Lord Mayor of the City of London
- Nat Sloane, Co-founder of the Impetus Trust and England
Committee Chair of the Big Lottery Fund
- Adele Blakeborough, Co-founder of the Social Business
Trust
- Rodney Schwartz, CEO of ClearlySo and Former Head of Equities
at Lehman Brothers
- Katie Hill, Research Author at ClearlySo
- Clare Thomas, Chief Grants Officer at City Bridge
Trust
Ends
Notes to editors
Download a copy of the report here
(3.83mb)
About the City of London Corporation
The
City of London Corporation is a uniquely diverse organisation. It
supports and promotes the City as the world leader in international
finance and business services and provides local services and
policing for those working in, living in and visiting the Square
Mile. It also provides valued services to London and the nation.
These include the Barbican Centre and the Guildhall School of Music
& Drama; the Guildhall Library and Art Gallery and London
Metropolitan Archive; a range of education provision (including
three City Academies); five Thames bridges (including Tower Bridge
and the Millennium Bridge); the Central Criminal Court at Old
Bailey; over 10,000 acres of open spaces (including Hampstead Heath
and Epping Forest), and three wholesale food markets. It is also
London’s Port Health Authority and runs the Animal Reception Centre
at Heathrow. It works in partnership with neighbouring boroughs on
the regeneration of surrounding areas and the City Bridge Trust,
which it oversees, donates more than £15m to charity annually.
About the City of London Corporation and sustainable
investment
- The City of London was a founder of the London Accord; a
co-operative research project intended to share thinking around
sustainable investment opportunities.
- In association with UKSIF, the City of London Corporation
rewards innovation in sustainable finance through its annual
Sustainable City Awards.
About City Bridge Trust
City Bridge Trust
was set up in 1995 since when it has awarded over £250m to support
charitable activity across Greater London. It is the grant-making
arm of Bridge House Estates, an ancient charity managed by the City
of London Corporation. The City of London is the sole trustee of
City Bridge Trust and members of its Court of Common Council form
the Trust’s Grants Committee. The Trust’s Grants Team is based
within the City of London’s main offices at the Guildhall.
About City Bridge Trust and social
investment:
- City Bridge Trust made an interest-free loan to Allia, who use
the money to invest in communities in East London. Allia will repay
the money in 2015 so that City Bridge Trust can use it to benefit
even more Londoners.
- City Bridge Trust hosted a major conference in February 2011
bringing together over 100 investors, charities, trusts and
foundations to discuss the development of the social investment
market and possible next steps. A think piece written by Diana Leat
based on issues discussed at the conference will be published
before mid-July.
- City Bridge Trust will host a series of social investment
seminars starting in autumn 2011. Aimed at charities, policy makers
and investors, these discussions will build on the research
commissioned from ClearlySo as well as other work on social
investment.
About Big Lottery Fund
The Big Lottery
Fund (BIG), the largest distributor of National Lottery good cause
funding, is responsible for giving out 46% of the money raised for
good causes by the National Lottery.
BIG is committed to bringing real improvements to communities
and the lives of people most in need and has been rolling out
grants to health, education, environment and charitable causes
across the UK since June 2004. The Fund was formally established by
Parliament on 1 December 2006.
Since the National Lottery began in 1994, 28p from every pound
spent by the public has gone to good causes. As a result, over £26
billion has now been raised and more than 330,000 grants awarded
across arts, sport, heritage, charities, health, education and the
environment.
About ClearlySo
ClearlySo is the leading
global hub for social business, enterprise, commerce and
investment. With the largest social business angel network in
Europe and a growing pool of nearly 2,500 social businesses and
enterprises (SBEs), ClearlySo connects social entrepreneurs with
investment capital, corporate partnerships and fellow social
entrepreneurs.
The ClearlySo SBE directory is the largest online listing of
social businesses and enterprises internationally. Featuring
c.2,500 verified businesses, clearly coded by industry sector and
social benefit this represents a powerful industry database for
investors, entrepreneurs and corporations. ClearlySo’s guiding
mission is to ‘help social entrepreneurs succeed’. As a champion
for the sector,
ClearlySo helps social businesses and enterprises raise their
profile amongst peers, the investment community, the public, press
and government - working towards a more social economy, for the
benefit of many.
Contact
James Abbott
020 7332 1754
07831 543 188
james.abbott@cityoflondon.gov.uk