Social Investment Scotland

Pierre Stadnik

Moray Fundraising Seminar 27th April 09

sis fundamentals

SISSIS

Joint venture public/private

sector

Started lending operations in March 2008

Initial loan fund £3M

Current loan fund £9M

Set up to improve access to loan finance

Work to develop demand for loan finance

the story so far

DRAWN BALANCE £2.7M

UNDRAWN CAPITAL £2.3M

WIP VOLUME 28 APPLICATIONS

WIP VALUE £4.1M

eligibility criteria

‘More than profit’ organisations

Based and operating in Scotland

Unable to obtain any/or all of funding requirements from conventional sources

what sis offers

• Loans from £10,000 - £500,000

• Term Loans, Working Capital, Bridging

• Conventional lending products, unconventional approach to lending. • Fixed interest rate

• No personal guarantees

• Absence of security not a major drawback

• Loans up to 7 years (10 years for property purchase)

• No early repayment fee

• Arrangement fee 1% V most other banks 2%

sis clients include

sis clients include

Cue & Review Recording Service

Gigha Renewable Energy Ltd.

Spruce Carpets

Glasgow City Mission

Highland Opportunity (Communities ) Ltd.

sis clients include

overview

A new £30m fund being subscribed over three years to invest in building the capacity, capabilities and sustainability of third sector organisations

Investment based approach (outcomes-focused)

A fundamentally different approach to previous grant regimes

Investments tailored to individual organisations requirements

Loans, ‘patient’ capital, and strategic investments

Investment packages from £100,000 to £1 million

target characteristics

have been operating successfully, partly through income generation, for at least three years

have established successful experience in public service delivery or trading in other markets

have potential to grow their turnover and/or become financially sustainable

are ‘investment-ready’ in terms of management, governance and financial position

Established third sector organisations located and trading in Scotland which reinvest surpluses for social or environmental purposes and:-

ineligible

proposals that seek to replace existing debt finance

subsidiaries of public bodies (e.g. local authorities)

housing construction and management operations of registered social

landlords

proposals that relate only to delivery of existing services

support agencies or intermediary organisations

organisations with no track record of generating income other than grants

organisations that are insolvent or at risk of insolvency

investment priorities

employability

environmental action

the underlying causes of health inequality

Other priorities will emerge as the fund develops.

2008/09 investment priorities will focus on organisations with social missions that address issues of:

investment products

loans - business plans will assessed for loan first (including commercial loans) before any other investment is considered.

risk/’patient’ capital - devised to deliver a mix of financial and social returns.

strategic investments - (non-repayable) amounts based on social outcomes

and will not comprise more than 50% of any funding package

development support – for organisations ‘almost but not quite’ investment-

ready. SIF will consider funding to pay for accounting or legal advice/support in relation to areas such as marketing, human resources,

investments will be tailored on a case by case basis and may contain a mix of :-

investment process

initial screening against published investment criteria to establish eligibility and ‘investment-readiness’.

collection of brief details of the organisation and the investment being sought.

discussion/feedback to assess ‘fit’ with investment priorities.

rigorous assessment of business plan, focused on four elements – business model – organisational development – financial stability

– projected social outcomes.

development of investment package, submission to investment panel with recommendations.

approval and documentation

monitoring and evaluation.

the story so far

Total ‘completed applications’ - 60 (2/09)

SIF Applications £30M (Capital £23M & Revenue £7M)

Projects worth £92M (Capital £71M & Revenue £21M)

Stage 2 - 19 £11M (Capital £9M & Revenue £2M)

Note: 120 organisation have started the ‘online appraisal’ but not completed it

case study

Momentum provide training, employment, social care and commercial services for some 60,000 people every year

Clients are people suffering from mental health and brain injury problems which limit their ability to work

Funding was required to purchase a new H.O. plus some revenue funding to develop activities to support business growth

The purchase of the building will provide an asset base which will make the company more attractive when tendering for contracts with bodies such as the DWP

Momentum Scotland Ltd (‘Momentum’)

case study

* Interest rolled up over period and waived if agreed social impact achieved

Momentum - Investment

Term Loan £200,000 (5% over 10 years) Patient Capital £100,000 (*no repayment for 5 years) Strategic Investment £200,000 (non-repayable) Total SIF £500,000

Term Loan (RBS) £700,000 (6.5% over 15 years) Total Cost £1,200,000

case study

OOTB focus mainly on supporting artists through the provision of affordable

studio space

Studio space provided for 118 artists (waiting list 200)

Funding was required to help fund a refurbishment programme to provide additional studio/workshop facilities in Dalmeny Street, Edinburgh

Work will add 14 studios, 2 large work/meeting rooms

Out of The Blue Arts & Education Trust (OOTB)

case study

OOTB - Investment

Term Loan £250,000 (5% over 10 years) Strategic Investment £175,000 (non-repayable) Total SIF £425,000

Grants (3) £312,200 Total Cost £737,200

Social Investment Scotland

Second Floor 1/2 St Andrew Square Edinburgh EH2 2BD

0131 558 7706

www.socialinvestmentscotland.com