Finance is the motor for all business development and the social enterprise sector is no different. A lack of access to appropriate finance can be a significant barrier to growth. The Coalition has been working hard to level the playing field for social enterprises looking to access finance.

While access to finance has improved for social enterprises in recent years, our members tell us that more needs to be done and this remains a key policy area for us.

There are a number of key issues regarding finance and social enterprises. Many of these surround access to finance including the role of grants, finance for growth and equity finance for social enterprises.

This relates partly to the fact that the social investment market remains undercapitalised, disconnected and lacks a secondary market. Another factor is a lack of financial information. Although a number of organisations offer social enterprises different forms of finance, the market is fragmented. There is no clear picture of who is able to supply what, and where the gaps in provision exist.

Further issues include the need for a broader understanding and standardisation of social return on investment (SROI) to demonstrate the added ‘social value' an investor receives from investing in a social enterprise.

We are working with our partner organsations on a number of areas to change the financial market for social enterprise. These include:

• developing both the supply and demand for risk capital, in the form of equity or quasi-equity finance;
• capitalising intermediaries, and leveraging private finance through the creation of a social investment bank; and
• creating a social stock exchange, to provide an exit strategy for social investors.

 

Consultations:

OTS consultation on the Risk capital investment fund for social enterprise (November 2007)

OTS consultation on the Community Assets Fund Consultation (June 2007)

OTS re-tender of the Futurebuilders Fund - time sensitive questions consultation (July 2007)

HM Treasury and Cabinet Office consultation on the Operation of CITR and Other Tax Incentives (February 2007)

Position papers and publications:

Unlocking the Potential: A guide to finance for social enterprise For further details and how to purchase a copy