£10m trust for social enterprises result of government cuts
Chrisanthi Giotis, Social Enterprise Live
Social enterprises can thank the government cuts for the launch of a new £10m growth fund backed by the City, says its co-founder.
Social Business Trust chair and venture capital heavyweight Damon Buffini told the launch event at Canary Wharf last night that six big name companies had signed over cash and pro-bono support to the trust because of the coming withdrawal of the state from services.
Buffini said: ‘It was really just a case of understanding the fundamental shift in what’s happening. That services provided by the government are not going to be provided by the government in the future and these services can be provided by social enterprises.’
Buffini said the Social Business Trust had approached its ‘dream team’, in terms of expertise that would be valuable as pro-bono support for social entrepreneurs, and that all the corporates approached had said yes.
They are: Bain & Company, Clifford Chance, Credit Suisse, Ernst & Young, Thomson Reuters and the €20bn private equity firm where Buffini is a partner, Permira.
The six companies have committed £3m in cash, which will be given out in the form of grants, and £7m in pro-bono support with the aim of rapidly growing up to 20 social enterprises that already have a strong track record so that these social enterprises can reach national scale.
Social Business Trust CEO Adele Blakebrough, who formerly headed up a similar programme at social enterprise CAN, warned this was not a process for the ‘faint hearted’.
She said social enterprises in the programme should expect to undertake a rigorous process of due diligence, have strong business plans for growth and be ready to have their assumptions and decisions challenged by their corporate mentors.
‘We want to have lots of people apply but we understand that there will only be a few that can cope with the process – this is not for the faint hearted,’ said Blakebrough.
Asked how this form of venture philanthropy by a partnership of corporates might intersect with social investment that seeks financial returns – as with the Social Impact Bond, for example, Buffini said that all social investment was an experimental area.
‘All this is pretty exploratory at the moment,’ said Buffini.
‘In 12-18 months time we will have used our experience and thought through this and I think come up with quite interesting and novel ideas about how we should be going forward.’
Blakebrough further emphasised the need for grants as a way of injecting capital into social enterprises.
‘There is still a need for grants as well as loans, it is ridiculous to think you can manage on loans alone, you can not,’ she said.
She also highlighted the fact that although the companies would not be asking for a financial return for their involvement in the programme they would receive a return in terms of staff learning and enthusiasm.
‘The skills and money committed by the Social Business Trust’s investors will add significant momentum [to the growth of social enterprises]. I also know from experience that our investors will learn things that will be of real value in running their own organisations,’ said Blakebrough.
As a charity itself, the Social Business Trust guidelines say it will only invest in social enterprises that are also registered charities. However, Blakebrough told Social Enterprise that the Trust’s lawyers were willing to challenge the government rules that led to that guideline if the trust decided it wanted to invest in a community interest company.
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