Growing the Social Investment Marketplace: Investment Readiness in the UK (2012)

A lack of business skills means many voluntary, community and social enterprise (VCSE) organisations are missing out on investment, according to a report commissioned by the Big Lottery Fund.

The UK-wide report into the social investment market, carried out by ClearlySo and New Philanthropy Capital, based on survey responses from 1255 organisations, found that many VCSE groups seem to be unaware of what is required of them. Nearly half of survey respondents who failed to secure investment felt they did not lack any financial, marketing, business or financial skills.

This contrasts with the views of investors who noted the lack of suitable financial skills among potential investees as a critical barrier. NPC and ClearlySo interviewed 40 investors and social investment intermediaries who also noted a lack of understanding of the concept of social investment and the challenge of changing mindsets from the traditional charitable model to a business model.

Growing the Social Investment Marketplace: Investment Readiness in the UK does indicate potential demand for investment-readiness support from the sector to be about 70,000 or more organisations in the next five years.

Peter Wanless, chief executive of the Big Lottery Fund, said: “The social investment market could be an exciting opportunity for some VCSE groups to develop further and access a new source of finance. Readiness for such investment remains a challenge in many places and is a current focus of attention for investors, investees and other interested parties.”

The report demonstrates a need for more support in the emerging social investment market as 43% of organisations that were unsuccessful in securing funding reported that accessing advice was ‘difficult’.

Iona Joy, head of charity effectiveness at New Philanthropy Capital, said: “NPC’s survey of investees and potential investees demonstrated a healthy appetite for advice, support, guidance and peer to peer contact. Respondents indicated that it can be difficult to get targeted advice and support; information on financial options and investors; and help with structuring and negotiating products and deals. However it was clear they would welcome advice and support on these issues.”

The findings of the research report will help in the creation of an Investment Readiness Fund to be launched by the Big Lottery Fund in 2013, which will contribute to the goal of supporting the development of the social investment market in England in a way that will enable VCSE organisations to better serve those most in need. It will be aimed at those organisations whose potential is not yet sufficiently developed to apply to the Cabinet Office Investment and Contract Readiness Fund, being delivered by The Social Investment Business Group, which last month announced its first £1m of awards to eight social ventures.