One outcome in the findings was that half of the respondents source finance directly from the conventional banking sector, as opposed to applying for support via indigenous social finance providers such as Community Finance Ireland and Clann Credo, which were established specifically to cater for that market, and ensure profits are recycled back into the sector.

The statistic is interesting in that it has been reflected upon differently in various quarters. Some would argue that the fact social finance now accounts for almost 50% of the sample is a significant step in the right direction. If the total amount loaned by social finance providers across the island is just somewhere north of €200m over the last 20 years, then this relatively small amount (in banking terms) has punched well above its weight.

Another mind-set would take a more pessimistic view of the finding. After 20 years of the provision of social finance in the Republic, there remains either a stark lack of awareness of the product’ existence, or, more worryingly, it means that the offering in its current structure may be incompatible with the needs of a substantial element of the market.

In either case, the present research project being undertaken by Rethink Ireland, DCU and Community Finance Ireland: “Financing Social Enterprise in Ireland – Models of Impact Investing & Readiness” aims to address both possible reasons behind this more dimly held view of the current state of play.

Through a series of customer focused product workshops, investor readiness sessions, and round table discussions with potential capital providers to the sector, moves are afoot to at least mitigate that low level of awareness, as well as making products more accessible for those at the margins when it comes to risk appetite.

The post Social Finance: Utilised by 50% of Social Economy surveyed first appeared on Community Finance Ireland.

The post Social Finance: Utilised by 50% of Social Economy surveyed appeared first on Community Finance Ireland.

The report carried out by research specialists MV Advocate on behalf of the Chief Executives of the Third Sector (CO3) and supported by Community Finance Ireland, Marsh and Ecclesiastical was made public at the CO3 Annual Leadership Conference on 29^th September 2022.

The event allowed the sector to gather collectively for the first time in three years, the first since before the Covid 19 Pandemic. The successful gathering saw those committed to the continued success of the Third Sector engage with difficult subject matter including mitigating financial uncertainty, navigating uncertain funding terrain and how to lobby government in the interests of the sector.

Consensus on the day was that the Third Sector in particular is resilient, that we have collaborated during tough times in the past and in doing so has allowed us to persevere and come out the other end stronger than before.

Despite tough times the new report has shown that 78% of organisations saw an increase in their service demand during and after the Covid Pandemic, showing just how integral the Third Sector is to the wider well-being of Northern Irish society.

As Valerie McConville, CEO of CO3 put it:

“It’s clear that the Third Sector is creating jobs and that this community is indeed a group of change-makers who are health and wellbeing advocates, shock absorbers who support in tough times.”

The conversation about the value of our sector has always been one for us and our team but this new report continues to promote the importance of the Third Sector and the ambition of those working in it.”

Valerie McConville, CEO of CO3

Community Finance Ireland’s Head of Community Finance for Northern Ireland Phelim Sharvin facilitated a panel discussion and workshop around accessing Social Finance at the event. He remarked that:

“As the head of the Northern Ireland business, I am delighted to have been approached to support and fund this new benchmarking survey.”

Phelim Sharvin, Head of Community Finance (NI), Community Finance Ireland

If you would like to learn more about the report and its findings these are available for a small fee on the CO3 Website.

The post New Report Values the Third Sector’s Input to NI Economy at £2.4bn first appeared on Community Finance Ireland.

The post New Report Values the Third Sector’s Input to NI Economy at £2.4bn appeared first on Community Finance Ireland.

In September 2021, responses provided to a survey on Social Finance (commissioned by Dublin City University) highlighted “Grants” as the default financial support considered by the sector when asked about matters relating to “Social Finance”.

The early results of this research brought into sharp focus the need to increase awareness across the Social Economy in Ireland of, and clearly differentiate between, “Social Finance” on one side, and “Grant Support” on the other.

At its simplest, “Social Finance” is a form of financial credit, provided to those entities demonstrating both, social impact arising from their activities, but also a capacity to repay. Whilst we must be careful not to diminish the importance of the former criterion, it is the capacity to repay which sets this support apart from Grants, themselves widely available within the Social Economy.

“Social Finance” remains outside that competitive environment usually evident across “Grant Funds”. The latter will inevitably comprise a finite amount of support, dedicated towards a restricted variety of purposes, with applicants often prioritised over one another in terms of impact measurement and, social return on investment.

Conversely, Social Finance will deal with all proposals on their own merits. The revolving nature of repayable credit means that usually, limitations on access to capital need not be considered. Any restrictions on quantum are more likely linked to a finance provider’s appetite for risk, and based on historic experience within a specific market.

Grants have an important place in the Social Economy. Some examples include, seed funding for untested start-ups with potential to scale, underpinning non-income generating community services and, as co-funding for infrastructural development where enhanced social impact is apparent.

Social Finance can be viewed as the “next step”, where community of interest buy-in has been proven, where income streams are established, and where an ambition for self-determination applies.

Its future is in its multiplicity of impact. Whilst the Grant is disbursed once in the hope of leaving impact, Social Finance enters a circular economy aiming to leave a legacy.

We have seen this in action, first hand with clients such as Finn Valley Athletics Club located in Stranolar Co. Donegal and The Sneem Digital Hub Sneem Co. Kerry.

The post Social Finance is Not another Grant first appeared on Community Finance Ireland.

The post Social Finance is Not another Grant appeared first on Community Finance Ireland.

The Community Voluntary & Social Enterprise (CVSE) sector owes a great deal to the availability of charitable support, as well as start-up and development grants from various quarters. Much of the Community & Voluntary subset will no doubt always be reliant on continued grant support to maintain the level of service provision. But what of the rest of the sector involved in growing the earned income side of their Social Enterprise?

Social Enterprise will usually need debt finance at some point, to draw down retrospective grant support, for capital acquisition, development, refinance personal debt, or manage existing unsustainable borrowings where immediate demands on repayment are a real threat.

The volunteer led ethos implies to the conventional debt system that there exists at least a reduced, if not total, absence of financial vested interest in the project.

The absence of collateral of any marketable value, often requires volunteers to sign personal guarantees in order to access this debt. A community manager pledging their home as security on a loan has been as bad as I have seen. That the voluntary board allowed the situation to arise is a whole other matter.

Social Finance is the incubator for the community sector on the road to achieving experience in borrowing, developing a credit score, but on terms and conditions appropriate to that market. It does not request personal guarantees off volunteers (or staff!). It normally does not charge arrangement fees. Its priorities are simple.

Presently in Ireland (2022), social finance up to a general limit of €500k is available to the CVSE sector absent arrangement fees and personal guarantees, yet recent survey findings would suggest that much of the sector remains unaware of the support, with over 50% financed by the conventional banking instruments such as overdrafts and secured borrowings.

IRD Kiltimagh in Co. Mayo are clients who understand the benefits of refinancing and are thriving as a result.

The post Social Finance: What’s the point? first appeared on Community Finance Ireland.

The post Social Finance: What’s the point? appeared first on Community Finance Ireland.