Seb, Simon and I recently visited Northumberland to meet with a group of social entrepreneurs from eleven organisations at a gathering kindly convened by Big Issue Invest. This is one of a series of roundtables that we have recently co-convened in order to hear directly from organisations about their experiences of social investment and investment readiness programmes, including our own. (You can read more about our visits to Birmingham and Leeds in these other blog posts from the team).
We were kindly hosted by Liz Prudhoe, director of Adapt in Hexham, who shared with us the story of her social enterprise’s journey. Having started as a predominantly lottery grant funded organisation in the early nineties, Adapt now operates across the North East, delivering in its mission to improve the quality of life of disabled and disadvantaged people via a wide range of services. These services are now supported by a variety of income streams including service contracts, training programmes, office unit rental income and accessible vehicles. Many of these income streams were made possible through social investment, and have allowed the organisation to overcome a number of challenges whilst continuing to thrive and expand.
After learning about Adapt’s history, we were joined by representatives from a number of other social enterprises from across the region. The entrepreneurs were all passionate about, and justifiably proud of, the social impact of their organisations. We heard many truly inspiring examples of the significant difference these often small scale organisations are making to local people’s lives in fields such as health and mental health, supported living and children’s services. Their social enterprises were at different stages of their journeys, with some just beginning to consider taking on investment and others having successfully utilised it on more than one occasion. However all were conscious of the need to maximise their enterprising revenue streams, as it becomes increasingly difficult to rely on grant funding in order to provide their vital services. In the wide ranging discussions around the opportunities and challenges that this brings, a number of key themes emerged.
- Relationships are key
Many of the social enterprises cited their relationship with a potential social investor as the most important factor in their decisions as to whether to take on investment and from whom.
Taking the time to understand the needs of the social enterprise, being willing to give advice and answer questions over months or even years until the time is right, and giving honest and tailored advice as opposed to an off-the-shelf sales pitch were qualities highly valued by the entrepreneurs. Ultimately, they look for somebody they can trust. Whilst factors such as interest rate were also considered important by some, many stated that they will not even consider exploring other options for subsequent loans once they have an investor who satisfies these relationship criteria. One likened the experience to supermarket shopping, explaining “you buy brand products but you test them first before you become loyal to that brand”. However they still considered it important to have a range of products on the shelf, as it was felt that a diverse range of providers is necessary to cater to such a diverse sector.
There was also consensus on the importance of peer networks. Prior to developing their own experience of taking on a loan, many entrepreneurs were likely to base their decisions around social investment and specific social investors on the experiences of their peers.
- Impact management should have a bigger impact than just enabling investment
The social enterprises we met were all committed to maximising their social impact, and many saw social impact metrics as having significant potential beyond simply satisfying funders or investors’ reporting criteria. There were ambitions to incorporate the measurements into business plans, share them with current and potential clients, and even utilise them for peer learning and wider sector development.
It is vital not only that reporting requirements are proportional, but that they are relevant. If a loan is provided to enable organisations to maintain or increase their social impact, the terms and conditions of the loan should do the same. It was clear from listening to the social enterprises that as long as they are able to focus on collecting the right metrics for them, such data has the potential not only to prove impact, but to improve it.
- It’s a journey of many (and varying) stages
The group gave us much food for thought around support requirements for organisations at different stages of the enterprise development process. Particularly the needs of those who are just starting to develop their thoughts in this area and require resource to be able to do so; and those who need to reach a point where they have sufficient resource to be able to make the most of opportunities which present themselves. This discussion was particularly timely as we are currently working towards developing our programme strategy for the coming years.
Our sincere thanks to Kevin Lloyd-Evans from Big Issue Invest for organising the day, to Liz Prudhoe from Adapt for hosting the meeting at her office, and to all of the social entrepreneurs for sharing their time, experience and suggestions. We took a lot away from the discussions and look forward to incorporating some of these ideas into our future thinking and programmes.