Lord Victor, the chairman of Social Enterprise UK, was speaking in May 2022 at the northern launch of Reclaiming the Future – Reforming Social Investment for the Next Decade. The findings of the Commission on Social Investment, which he led, delivered a searing assessment of the social investment market. The report calls for ‘comprehensive structural reform’ if the UK is to harness the triple benefit of social commerce organizations – those that trade commercially, deliver socially and deliver the kind of bottom-up innovation and system change demanded by the government in his Strategies for Leveling Up and Shared Prosperity.
Supporting the growth of social enterprises could add £3bn to the UK economy, injecting over £600m into the poorest parts of the country
The Adebowale report estimates its recommendations could help 5,000 social enterprises grow, creating 180,000 jobs directly or indirectly, including 36,000 jobs in the UK’s most deprived communities over the next ten years. These findings could add £3bn to the UK economy, pumping over £600m into the poorest parts of the country.
Objective: £20 million to develop the social economy
One of the issues identified by the Commission on Social Investment was why Kindred was set up: that social enterprises in parts of the UK have been underserved by social investment – as have disadvantaged groups , such as black-led social enterprises.
Research in 2017 by the University of Liverpool’s Heseltine Institute and social investment analyst Seebohm Hill showed that the social economy in the Liverpool region (Liverpool plus five neighboring local authorities) had 1,400 organisations, with turnover of £3 billion. But the gap remained for patient funding to help these organizations increase their impact in a flexible and sustainable way that met their individual needs. So, in September 2019, we brought together a group of around 20 of these social economy organizations to draw up our plans.
Together with Power to Change, we advocated with the Liverpool City Region Combined Authority, the local government responsible for Liverpool and its surrounding boroughs. Metro Mayor Steve Rotheram pledged to support our ambition in October 2019. Over 150 Social Commerce Organizations (STOs) from across the Liverpool region have been involved in reshaping the way money can work and by the end of our first year, our community had grown from 150 to over 500 organizations. A £6.5m fund has been set up for the first five years – £5.5m from the LCR Combined Authority, and a further £1m from Power to Change. It includes a target of £20 million to meet future demand and ensure growth.
We offer cash to patients at 0% interest and with options to return some funds as social and financial returns
In July 2020, Kindred was established as a Community Interest Corporation (CIC), designed to connect, support and harness local entrepreneurship for social good. We offer social commerce organizations patient money at 0% interest and with options to return some funds as social and financial returns. Reimbursement of social return is done by calculating the social value, in equivalent monetary value, of the organization’s work. Typically, up to 30% of a financial investment can be repaid in this way.
We accelerated a pilot round of investment when the pandemic hit. Despite economic lockdowns, CTOs have shown resilience and determination because of the support they have received and because the nature of their work is simply too important to fail. And in 2021, 22 social commerce organizations have invested a total of just under £1m to support their growth.
Creating an environment in which each cohort of companies supported each other – rather than a grant-making approach where organizations were expected to compete for funding – was critical to our plans to create collective impact, as our evidence show that collaboration and clustering accelerate growth and impact. places. And it’s a low-risk investment because it expands the businesses and people who already make things work where the rest of the economy doesn’t reach or serve – rather than those who are good at writing offers or who can afford to do so. pay someone else to do it.
Kindred invites every STO to tell us about their finances, social and environmental impact, history, projects and appetite for collaboration – in words, pictures or presentation. The pitch of each STO is submitted to a panel of peers. Each financial arrangement is tailored to the needs of the STO, as each is different, with rules created by the Kindred community.
This inclusive approach means we know they will do everything possible to repay Kindred’s investment.
This inclusive approach means we know they will do everything possible to repay Kindred’s investment, so that future entrepreneurs can benefit from the fund. The appetite of CTOs to migrate from subsidy-dependent models to commercialization and become more financially viable has contributed to the strength of the sector and will help Kindred support future generations of CTOs. We have also found that peer support helps build resilience and has led to a number of collaborations. For example, our Peloton bike couriers deliver for our community laundromat, Kitty’s; The Birkenhead STOs formed the Left Bank Collective, driving the town’s cultural renaissance. Our forestry schools work with youth groups to help local people thrive. Our Black-led STOs have formed their own “BlaST” network; these organizations took 25% of all investments in our first round.
And we’re confident that we’re starting to create the infrastructure here to make those changes. The Mayor of the City of Liverpool, Joanne Anderson, hosted the first Social Investor Summit with Kindred in March 2022, inviting other investors to increase inward investment in the city and maximize the right kind of support for STOs.
Metro Mayor Steve Rotheram has supported it since its inception, as part of working across the region to promote better business practice – and describes Kindred as one of the ways the Liverpool City Region is opening up the way to promoting better business practices.
It recognizes the role that social commerce organizations must play. As he told us, “Of course we want strong and successful businesses in our region, but we have to go further. We also want them to prioritize how they can enrich people’s lives and bring greater prosperity to the communities in which they operate. »
CTOs thrive in areas of market failure, filling the gaps left by the retreat of traditional businesses, serving the places – and communities – most excluded from other economic and employment opportunities. They are fast and nimble – helping them grow will increase the resilience of our local economy. And the collaborative communities they formed seemed to perform better than those working in isolation – so we need to develop opportunities for CTOs to support each other and measure their impact, to provide better evidence. Their achievements are life-saving – transformational – and their continued potential is vast.