What we will invest in
Following a review of our social investment strategy in July 2020, we are now focusing our social investments on two key aims:
- To use concessionary social investment to help move frontline organisations and enterprises that are tackling poverty and inequality towards longer-term sustainability.
- To continue to demonstrate that impact investments can offer good financial returns whilst also achieving positive social outcomes.
Our aims for social investment
In practice, this means:
We recognise that smaller organisations and emerging enterprises often struggle to secure affordable financing and we are ready to invest on more concessional terms in order to help support their growth and development.
This could be by offering low-interest loans, longer repayment periods, accepting greater risk or providing investment as equity. Whilst we seek to preserve our capital in the longer term, we are keen to support pioneering projects and social enterprises that can offer new ways to tackle issues around poverty. We are particularly keen to support investment opportunities led by people currently less well ‘connected’ to investment e.g. women, Deaf and Disabled people, refugee and BME groups.
We are keen to hear from enterprises directly but also social enterprise ‘incubators’ who may have a ‘pipeline’ of investable opportunities. However, as our capacity is quite limited, we do ask the latter to contact us before signposting organisations to the Trust.
We will continue to consider investment in finance-focused social investment opportunities (which are typically managed funds or larger multi-investor initiatives).
However, with a significant number of these already in our portfolio, the number of these we will make in the future will be smaller and subject to tighter criteria. In practice this will likely mean limiting ourselves to opportunities that are strongly focused on London, which offer significant social outcomes, are in response to a specific need and, ideally, are linked to our grant-making priorities.
Examples of what we might invest in
Under these aims. the type of investments we will consider are varied and could, for example, include:
- A community project tackling poverty and inequality that needs investment to develop its premises in order to expand its services; this might include the Trust purchasing a property and renting it back to the centre.
- Investment to enable a social enterprise to grow to scale and increase its impacts. Income from the sale of its goods or services being used to repay the investment.
- An investment alongside an experienced housing specialist e.g a housing association or Registered Social Landlord to develop and deliver new ideas to increase the number of affordable homes for disadvantaged groups in London.
- A legal advice project needing finance to develop new income generating work – possibly to cross-subsidise free advice work.
For both aim #1 and #2 we will also consider making a small number of grants (or a blend of grant and investment) where this may strengthen or develop a viable investment opportunity. These will be considered on a case-by-case basis and separate from our main grant programme.
Size of investment
There is considerable flexibility in the size of our investments, with each application considered individually. Investments are likely to be in the range of £50,000 up to £1 million. Similarly, the duration of any investment is not fixed and we will consider short, medium and long-term proposals.
Risk and Return
Our social investments must provide a balance of risk, financial and social return. We will consider investments that provide lower financial returns where particularly strong social benefits can be demonstrated. Similarly, investments with a higher level of risk will need to offset this by providing stronger social impacts and possibly greater financial returns as well.
Who should apply?
We will consider investment opportunities from any project or organisation that is able to present a viable and realistic proposal. When assessing applications we will consider your organisation’s size, track record, experience, and skills to manage any investment. Successful applications will be able to demonstrate a clear income stream (used to repay the investment), robust planning for the lifetime of the investment, a good understanding of any risks (and how to mitigate them) and reliable monitoring and management systems. This is however not an exhaustive list and each application will be considered on a case-by-case basis.
As above, we are particularly keen to support investment opportunities led by people currently less well ‘connected’ to investment e.g., women, Deaf and Disabled people, refugee and BME groups.
How to apply
In the first instance, we ask that you submit a brief summary of your proposal (a maximum of two sides of A4) that summarises:
- What the investment is for and how it tackles poverty and inequality in London?
- How it will benefit your organisation.
- How you have involved the beneficiaries of your idea in its development and how they will help direct it in the future.
- To what extent you have developed your ideas e.g. we will need to see your business plan.
- What are the financial and social returns you anticipate the investment will generate?
- The size and duration of investment required.
- Who else you are seeking investment from?
- What income streams or other source of income you will use to repay the investment and interest?
- What risks to the investment have you identified?
If, following this initial proposal, we feel there is potential to take your idea further we will ask you to prepare a more detailed proposal using a form we will provide.
For further information or to discuss a potential investment application please contact:
4 Chiswell Street
Telephone: 020 7606 6145