Since May 2012 94 social ventures with high potential for growth have received grants worth £8.9 million to purchase specialist support such as legal advice, financial management and public service commissioning, thanks to a business support fund managed by the Social Investment Business and funded by the Cabinet Office, reveals a report released today.

Some 74 are still actively carrying out their business support programmes.

The £10 million Investment and Contract Readiness Fund (ICRF) is the world’s first fund dedicated to helping charities and social enterprises acquire the skills they need to raise investment and compete for public service contracts, and it has already made a “significant and positive impact”, according to the independent review Ready, Willing and Able: An interim review of the Investment and Contract Readiness Fund by The Boston Consulting Group.

Within this, eight charities and social enterprises have won investments and contracts worth £35 million: grants worth £815,144 have already helped the first eight ventures to win deals worth £34.9 million.

They include:

Pure Innovations, whose £52,250 grant helped it win a five-year contract worth £11.7 million from the Royal Borough of Kingston to take over the running of its learning disability service.

Empower Community, whose £108,650 ICRF grant helped it secure a £10.1 million loan from a UK institutional pension investor, which will allow it to provide free daytime solar energy to social housing tenants in more than 2300 homes in Sunderland.

Greenwich Leisure, whose £129,000 ICRF grant helped it raise £5 million through a bond issue, ensuring that two London 2012 Olympic venues – the Aquatic Centre and the Copper Box arena - are available to local residents as well as elite sportsmen and women.

Midlands Together, whose £149,300 ICRF grant helped it raise £3 million through a bond issue to set up a programme to rehabilitate up to 150 ex-offenders over five years by providing jobs renovating properties in Birmingham and the Black Country.

Jonathan Jenkins, CEO of the Social Investment Business, said: “These success stories show how modest levels of targeted business support can make ambitious charities and social enterprises much more successful at raising the investment they need to expand their activities and winning contracts to provide public services.

“We want to build on the success of the ICRF and use business support grants to help charities and social enterprises win the funding they need to deliver bigger and better services tailored to the needs of their communities, create more jobs and boost their local economies.”

Nick Hurd, minister for Civil Society, added: “Social ventures need our backing to grow and compete for public service contracts and that is what the Investment and Contract Readiness fund is for.

"Britain is blessed with fantastic charities and social enterprises which work to improve society and contribute to the economy, and I am pleased that this fund - the first of its kind anywhere in the world - is making such a positive impact so quickly.”

The ICRF aims to ensure that social ventures with high potential for growth are better equipped to secure investment and compete for public service contracts.

Organisations looking to raise at least £500,000 in investment or win contracts worth £1 million or more, can apply for grants of £50,000 to £150,000 to purchase the specialist support they need.

Adrian Brown, co-author of the report, commented: "The ICRF is a great example of the UK leading the world in social investment, and its success to date should be celebrated. Using grants to help grow sustainable social ventures is a careful balancing act and our report identifies six areas the Fund should address to ensure it continues to build a sustainable market."

BCG reported “widespread support for the Fund from ventures, providers and investors” and the ICRF has also received backing from conventional lenders.

The Fund’s Investor Panel, which decides whether to make grants, is chaired by Big Society Capital and includes the Big Lottery Foundation, NatWest, Triodos Bank, Bridges Ventures and the FSE Group.

The Ready, Willing and Able: An interim review of the Investment and Contract Readiness Fund report concludes: “As the social investment market continues to evolve it will be important that the design of the Fund evolves with it.

"Market shapers such as Big Society Capital, Big Lottery and the Cabinet Office as well as the Social Investment Business can help steer that evolution by continuing to lead the conversation about what kind of social investment market we are seeking to build, the extent to which ongoing subsidy is likely to be required, and the areas towards which any subsidy is best directed.

“This will ensure that increasing numbers of social ventures are investment and contract ready, willing to seek specialist support as required, and able to win in the market.”

The report highlighted six areas in which the fund could be improved:

1. Increase transparency of provider performance. More information about their size, experience, expertise and success rate would help ventures choose.

2. Improve feedback from the panel to applicants. Clearer reasons for rejecting applications would help ventures as would a document detailing common problems with applications.

3. Enhance the contract readiness experience of the panel. Currently members’ experience is weighted towards investment readiness. Ultimately it might be appropriate to split into funds specialising in each area.

4. Reduce or remove the direct grant to ventures. The fund should develop its use of repayable components of grants to move ventures away from a “grant mindset”, incentivise them to push for outcomes, and allow the fund to support more ventures. Market subsidies, such as the ICRF, should be judged on their success in helping to change attitudes and shift social ventures away from dependency on grants.

5. Improve the predictability of the fund. Better publicity around the amount, duration and nature of application windows would help providers and ventures to plan.

6. Enhance the role of the fund administrator. Better resourcing would allow the administrator to give more support to applicants, make recommendations to help the panel achieve greater consistency, and undertake more robust post-grant monitoring.

Richard Litchfield, CEO, of consultancy Eastside Primetimers added a note of caution: "The report shows that this new and innovative Fund is a big step in the right direction, but there is a long way to go.

"While the long-term prospects for social finance are very promising the reality is that the majority of deals today are asset-based property loans and there is a limited number of funders that will invest into other types of projects.

"The ICRF has an opportunity, though, to be an important catalyst by funding market-making activity, connecting and attracting new types of finance with entrenched social problems that charities and social enterprise are tackling on society’s behalf.

"But for this to happen; everyone involved needs to see ICRF for what it is – a catalyst - and embrace risk and reward mind set."

Share Story: