This Social Investment Insights paper focuses on how social investment can be used to support community organisations.
Communities across the UK have faced a decline in government spending both nationally and locally, resulting in weakened socio-economic outcomes, as well as a general lack of empowerment to affect change. In the past, several initiatives have attempted to improve the state of communities however many of these were not community-led, nor were the solutions owned by local people. In recent years, local authorities across the country have been looking to dispose of assets, owing to changes in policy as well as the economic climate. Community members have responded to these challenges by coming up with new ways of improving their localities.
Community enterprises and ownership of assets have emerged as solutions which can achieve real community engagement, ownership and empowerment. Communities are starting-up enterprises with the community’s interests at heart, as well as acquiring and developing important local assets which hope to deliver sustainable revenue streams alongside social change. Examples of these range from community shops and pubs, to solar and wind projects, libraries, housing and industrial buildings.
These types of projects have the potential to create widespread impact, both at a community-level (e.g. reducing social isolation, increasing community cohesion) and on a socio-economic basis (e.g. reducing crime, unemployment). The most impactful community interventions identify issues local to their area and develop solutions to address those needs. Assets can have impact through the direct activities of their tenants, as well as through any rental surplus profit that can be reinvested into communities.
There are many challenges facing communities that want to deliver projects of this nature including a lack of time and appropriate skills within the community, lack of available finance, difficulty in developing a financially viable business model, challenges around governance, low representation of minority groups and precarious relations with local councils.
The above factors mean there are many opportunities for social investment to play a catalytic role. The biggest opportunities are around blended grant-loan products for higher risk pre-feasibility and feasibility work as well as capital acquisition in communities with entrenched market failure. Alongside blended products, investment is needed funding growth, bridging or underwriting finance, and warehousing of assets. Big Society Capital sees this area as an essential component to its vision of a social investment market which is accessible and inclusive to ordinary individuals across the UK.