A model for Social Impact through Investment?

A model for Social Impact through Investment?

We started the Enterprise Homes Group partly because we wanted to move away from traditional forms of charitable fundraising and instead find ways – through enterprise – of generating income and revenue. Our aim is to become financially free through income generation in order to be able to focus even more clearly on our social mission of making homelessness history. And we also want to find ways to create a model for Social Impact through Investment.

Why do we see the need to move from a traditional charitable approach?

We see the need to move away from a traditional approach because of the following:

  • Too much time spent trying to raise funds, filling out applications and reporting back with not great levels of success; and
  • Being at risk of compromising our values and approach in order to fit in with funding criteria; and
  • Having the freedom to be able to develop and expand when the need arises without first having to go out and find additional funding and putting things on hold in the meantime; and
  • Creating a legacy for future generations to come in which our unified pathway out of homelessness is sustainable in the long run.

What is the alternative plan?

We have now developed a 10-year business plan that will enable us to achieve those goals and involves raising 5 million pounds in investment capital. We will subsequently invest this into the UK property market to create an ongoing revenue stream which will:

  • cover our core costs,
  • provide for some immediate expansion; and
  • leave enough surplus to be able to cover the costs of repaying the investment without having to sell off any of the assets that have been purchased along the way.

At this stage we are confident that we could set something up that would bring in a competitive return of maybe somewhere in the region of 3%-4% on a 5 to 10-year interest only basis. We believe that this could be a low to medium risk investment since it would be tied up in bricks and mortar and generating surpluses that will form cash reserves which add to the security.

What mechanisms might assist us in achieving these goals?

We currently have two issues that we need to resolve and with which we would like your help.

  1. Raising 5 million in capital investment – through crowdfunding with peer to peer lending? JVs? CSR? Social responsibility in the property sector among landlords/investors? Financial institutions? Anything else you can think of that could be a model for social impact through investment aimed at the property sector? We think that the property sector literally holds the keys to making homelessness history and so this is a great place to start.
  2. Putting in place a financial mechanism that would enable this to be rolled out wider to individuals in the form of a Social Impact ISA or charity bond. This would be a model for social impact through investment that would be more widely available. People with smaller amounts that they would like to invest, could not only get a competitive return on their savings but also to do so in a manner that is socially responsible and has a high level of social impact. This has to be FCA regulated and may require partnership with an existing provider or model. Any thoughts?

We believe that creating a model for Social Impact through Investing could be the future of the Social Sector to compliment or even at times replace charitable funding.

We need suggestions as to what would be the best means to achieve these goals and how it might work. If you have any thoughts or would like to chat further with us about this, please get in touch at investment@enterprisehomesgroup.org.uk

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