Patrick Minne Northern Ireland Manager

Charity Bank

Community House

Citylink Business Park

6a Albert Street

Belfast BT12 4HQ

P: 02890 244179

M: 07824 340889

T: @patrickminne

E: pminne@charitybank.org

Patrick Minne Manager, Northern Ireland

Social Finance: What is it, and where does it fit in?

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1. Introduction

2. How do grants and loan finance compare?

3. When should a non-profit consider loan finance?

4. What do non-grant financers look for and why?

5. What skills are transferable between applying for grants and applying for non-grant finance?

6. What other types of non-grant Finance exist?

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Charity Bank in Northern Ireland

What we do

Deposits and loans for social impact Developing third sector finance and business skills

Why we do it

To reduce dependency on grants To improve sustainability and independence

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Sources of Finance

Income Spectrum

Gift Economy

Donor

Grant Funding

Funder

Structured Market

Purchaser

Open Market

Consumer

Balance Sheet Financing

Debt Finance Equity Finance

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How do grants and social finance lending compare?

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Grants

Can be high value Can be high value

Funds are guaranteed Funds are guaranteed

Loans

Business support available Business support available

Funder understands balance between social and economic objectives

Funder understands balance between social and economic objectives

How do grants and social

finance lending compare?

Grants Loans

Low cost Interest and admin fees payable

Low risk Repayments are mandatory

Restricted income Unrestricted income

Time consuming application Reliance on supporting evidence

Competition for one pot App viewed on its own merits

Onerous monitoring per grantor Existing evaluation processes accepted

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8

What do social finance providers look for in an applicant and why?

Number 1: Social Impact It’s their mission It’s why investors and depositors support them It’s why they’re obsessed with social impact measurement

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What do social finance providers look for in an applicant and why?

Number 2: Repayment Capacity It’s their mission It’s why investors and depositors support them It pays ethical depositors their fair rate of interest It allows capital to be recycled to support new projects

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Grant applications and loan applications: the transferable skills

Needed for both grant and non-grant finance • Ability to clearly define the project’s outputs and evidence the

social impact • Ability to demonstrate how a proposal is aligned with

organisational mission • The provision of a sound project plan plus robust project

management and delivery arrangements • The provision of well-researched project costings • Clearly defined risks and actions to mitigate them

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Additional requirements for non-grant finance

• Previous years’ accounts • to gauge liquidity • to evidence historical trends in spend • to evidence the existing funding mix

• Budgets and cash flow forecasts • to help form a view on how realistic the bridge is between historical spend and the new

project spend • to help in risk-analysing projected sources of funding and carry out sensitivity analysis • to ensure there is adequate loan repayment capacity

• Security (only on longer loans) • to establish the loan-to-value ratio (which helps establish the interest rate)

• Trustee and SMT CVs • to ensure an appropriate level of skills on the board • to risk manage governance • to ensure trustees are alive to risks and their management in the organisation

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Types and sources of finance for community enterprise, asset

acquisition and development

Loans 1. Mainstream Banks 2. Social Finance Lenders 3. Peer to peer lending

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Equity Finance 1. Community Share Issues 2. Crowd funding 3. Venture Philanthropy 4. Social Impact Bonds 5. Patient Capital 6. Venture Capital 7. Business Angels

Types and sources of finance for community enterprise, asset

acquisition and development

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www.crowdingin.com

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1. Introduction

2. How do grants and loan finance compare?

3. When should a non-profit consider loan finance?

4. What do non-grant financers look for and why?

5. What skills are transferable between applying for grants and applying for non-grant finance?

6. What other types of non-grant Finance exist?

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“The first resource is spirit.

If you have that, you will find by hook or by crook the other resources that you need.

If you don’t have spirit, your outlook is bleak.”

Clement Attlee, 1945.

Patrick Minne Northern Ireland Manager

Charity Bank

Community House

Citylink Business Park

6a Albert Street

Belfast BT12 4HQ

P: 02890 244179

M: 07824 340889

T: @patrickminne

E: pminne@charitybank.org