The Gritt Realit of ocial Inve tment: when i it the right ... · 10/12/2016 The Gritty Reality of...
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10/12/2016 The Gritty Reality of Social Investment: when is it the right time for a charity to take on loan finance? | Big Society Capital https://www.bigsocietycapital.com/latest/type/blog/grittyrealitysocialinvestmentwhenitrighttimecharitytakeloanfinance 1/3 | HOM / LATT / LOG The Gritt Realit of ocial Invetment: when i it the right time for a charit to take on loan Ąnance? A ocial Invetor 14 June 2016 Charitie are often reluctant to take on loan ānance, preferring intead to rel on grant from trut or individual. That’ undertandale, ut ometime a loan i the et wa of ridging a cahĂow gap or ecuring capital to invet in an organiation’ future. A a funding od pecialiing in the ocial ector, we ānd we’re often approached onl after traditional fundraiing avenue have failed or fallen hort. Thi mean man charitie are unprepared for the loan application proce and haven’t factored it into their plan. trateg area | mall and medium ized charit ānance, Innovation, Participation, cale Region | UK wide
Transcript of The Gritt Realit of ocial Inve tment: when i it the right ... · 10/12/2016 The Gritty Reality of...
10/12/2016 The Gritty Reality of Social Investment: when is it the right time for a charity to take on loan finance? | Big Society Capital
https://www.bigsocietycapital.com/latest/type/blog/grittyrealitysocialinvestmentwhenitrighttimecharitytakeloanfinance 1/3
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HOM / LATT / LOG
The Gritt Realit of ocial Invetment: when iit the right time for a charit to take on loannance?
A ocial Invetor14 June 2016
Charitie are often reluctant to take on loan nance, preferring intead torel on grant from trut or individual.
That’ undertandale, ut ometime a loan i the et wa of ridging a cah ow gap or ecuring capital toinvet in an organiation’ future. A a funding od pecialiing in the ocial ector, we nd we’re oftenapproached onl after traditional fundraiing avenue have failed or fallen hort. Thi mean man charitie areunprepared for the loan application proce and haven’t factored it into their plan.
trateg area | mall and medium ized charit nance, Innovation, Participation, caleRegion | UK wide
10/12/2016 The Gritty Reality of Social Investment: when is it the right time for a charity to take on loan finance? | Big Society Capital
https://www.bigsocietycapital.com/latest/type/blog/grittyrealitysocialinvestmentwhenitrighttimecharitytakeloanfinance 2/3
How it happen
We received an application from an independent leiure charit in the middle of raiing fund to develop theirite and improve the viitor experience. Almot 60% of the necear fund had een ecured from a portfund, ut the charit’ trutee were aware that the would onl receive the grant once the work wa completeand invoice received. Thi ituation i unfortunatel common within the ector, a grant are often paid at theend of a project, rather than at the eginning when the are uuall needed.
Like man other charitie, the organiation’ rt thought wa to ecure an overdraft that could ee themthrough their cah ow prolem. However, negotiation with their high treet ank fell at the rt hurdle.
Where to go
Fortunatel, one of the trutee had a connection to a ocial lender and o wa aware of alternative to themajor ank. Further reearch etalihed that we were a viale potential lender and the trutee approachedu for a loan.
Appling for a loan had not een part of the charit’ project plan and the were unprepared for the extent ofthe application proce, which require the completion of extenive paperwork.
There wa de nitel a teep learning curve for oth the charit ta and trutee, who acknowledge that inhindight, the had underetimated the rigorou due diligence proce. Through regular face-to-facemeeting, we were ale to upport them through the application proce and ait with unfamiliardocumentation.
Making it work
ince the redevelopment, the charit’ annual viitor numer have more than tripled. It ite i open on moreda of the week, neceitating the hire of additional ta , although the increaed income ha outweighed theincreaed expenditure. Located in a rural area, the charit’ newl raied pro le and increaed viitor numer
10/12/2016 The Gritty Reality of Social Investment: when is it the right time for a charity to take on loan finance? | Big Society Capital
https://www.bigsocietycapital.com/latest/type/blog/grittyrealitysocialinvestmentwhenitrighttimecharitytakeloanfinance 3/3
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ha helped to ene t the local econom, increaing tra c to the local village hop, pu and café. Thecharit itelf ha een nominated for and won everal award in it eld and it future appear ecure.
A fundamental ke to the ucce of thi loan wa the trength of the charit’ original uine plan, whichhad carefull and accuratel weighed up the cot of the redevelopment againt the projected improvementto it nancial performance. ecuring the loan from u gave the trutee the con dence to move forward andtick to their original project timecale, rather than waiting to otain more grant mone.
The ke learning for u i to e clear at the outet aout the extent of the loan application proce. There ioften a knowledge gap for organiation eeking ocial invetment for the rt time. We have a reponiilitto ridge thi gap and lend upport where needed. Meeting potential orrower face-to-face i an importantrt tep in thi proce.
a ocial Invetor
14 June 2016
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