Wednesday 16 March 2011

Investing in innovation; loans are good

The Social Investment Business plays a crucial role in making loans to support innovation. One of the important lessons we have learnt is that even small community organisations can use loans to grow.

Against a background of cuts in grants this must be a strong way to defeat the cuts and take advantage of future growth.

SIB are working on two projects which have received funding from the Department for Education. Both projects partner with ACEVO member 4Children in the important area of early years and childcare services. This work is all about building the sector’s capacity to both reform and deliver services for young children and their parents – showing the sector can play an active role in public service delivery in a crucial area.

There are thousands of organisations – large and small – providing care, education and play for children . And our sector’s role in improving child welfare has an illustrious history; with the big national charities history stretching back hundreds of years.

Indeed it is thought the very first Government contract for the delivery of public services was for children- with Coram Fields back in the 18th century!

These days, these organisations face the challenge of surviving through the current climate of cuts, and alternative ways of ensuring they can continue to be there to help some of our most needy children is very, very welcome. Loans will grow as a feature of a diverse income streams for charities.

Again,we think loans are new innovation for our sector. In fact charitable foundations were making loans to encourage social entrepreneurs in the 16th century!

The benefits to society, communities, parents and, most importantly, children themselves of getting the right support to children in their earliest years is well known – and expenditure on people at that age is a money saver for government in the long term. So investment in innovation is crucial.

Children’s services are an area where a lot of innovative developments are taking place for the sector. The good old Big Lottery Fund recently announced the Improving Futures Fund, a £20m programme that will fund charity-led partnerships supporting families with vulnerable children.

Loans will be important in securing government contracts. This is exactly what sector organisations should be doing – getting paid by the government in exchange for their crucial work (although I know some people still have trouble understanding the concept that charities can earn money this way, just like private sector service providers!).

With the diminishing access to grants, public service contracts are going to be one way for some community groups, charities and social enterprises to source alternative forms of income, and demonstrate that they can provide a measurably increased social impact when delivering these services.

It’s also great to see the encouragement of charities to work together locally to provide the best service to those need it the most. Working together in consortia also gives charities and social enterprises, big and small, the opportunity to deliver local services and play a part in winning local authority contracts. This will also lead to a stronger local sector which is less reliant on grant funding.

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