'These days charity trustees must think like businesses'

When it comes to being successful, charities and their trustees need to leverage all their assets as LUCY ARMSTRONG, deputy chair of the North East Social Investment Company (NESIC) explained in The Journal’s Top 200 supplement 2018.

Lucy Armstrong is deputy chair of the North East Social Investment Company

To a private sector company needing to achieve its business plan goals, the solution would be clear; raise capital – and borrowing would be high on the list, but for many third sector organisations and charities, raising repayable capital still feels like it comes with significant risk.

The reality should be very different. For organisations with a clear view of where they are going and what they want to deliver, repayable capital - as a route for funding those ideas - comes with a freedom not enjoyed through the old routes of grants, where prescriptive approaches were outlined, and organisations were tied up with days of reporting to satisfy the grant makers.

“The Third Sector can and does provide innovative ways of delivering crucial services to society. It generates economic benefits, creates employment and makes profit, but it also delivers social impact and outcomes.”

— Lucy Armstrong

Repayable capital through organisations such as the North East Social Investment Fund (NESIF), require a clear business plan and a strategy for delivery, but then it is up to the trustees, non-executives and boards to deliver the numbers and social outcomes in that business plan; and that is the sole criteria – how it is achieved and whether the organisation has to flex that plan at times, is up to them.

Today being worthy is not enough however well-meaning the organisation is. To do their job properly, trustees and boards must leverage all the assets at their disposal, from raising capital for new projects, to using existing resources for delivery to create something more and greater for the organisation. No one underestimates that it can be difficult at times to juggle and balance the needs of capital, beneficiaries and people, but funders like NESIF can provide support in doing this.

The Third Sector can and does provide innovative ways of delivering crucial services to society. It generates economic benefits, creates employment and makes profit, but it also delivers social impact and outcomes.

This article first appeared in The Journal’s Top 200 Supplement 2018

Key to this is social investment, which is simply a repayable loan given to a charity or social enterprise, formed to benefit the community in some way.

Of course, social investment isn’t appropriate for every organisation but, as a business model, there is no doubt that it works.

Trustees need to think like business people. They need to ask themselves if borrowing money will enable their organisation to do its job better, safeguard its future and enable it to meet its aims and objectives.

And, if the answer is yes, then they absolutely should think about borrowing and talking to The North East Social Investment Fund. This is a £10.2m fund set up to support charities and social enterprises across the North East of England. Investments range from £100k to £1m and can be used for a wide range of purposes, including operational costs, working capital, asset purchases, or a combination of purposes. The fund’s aim is to increase or protect an organisation’s ability to deliver social impact.

The fund was set up through The North East Social Investment Company which provides an innovative, regional, strategic solution to developing the market for social investment. It was originally established with funds from Northern Rock Foundation, Big Society Capital, Esmee Fairbairn and the Joseph Rowntree Trust. The Community Foundation have now taken over the role of Northern Rock Foundation

For further information about North East Social Investment Fund please visit www.northstarventures.co.uk/funds/social-investment-fund