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ACF Evaluation Press Release 117.21 Kb

Patient capital, a pioneering investment tool used to enable communityenterprises to generate sustainable income streams, is enabling organisations to stand on their own two feet, according to an independent evaluation commissioned by the Adventure Capital Fund.

A study undertaken by the Centre for Social Evaluation Research at London Metropolitan University, examined the impact of investments made by the ACF since it was established in 2002.

Patient capital – investments that are tailored to the needs of third sector organisations – was shown to be a crucial aspect to organisations that need time to build their capacities and to generate sustainable income streams without the immediate burden of making interest and capital repayments.

The evaluation found demand for investment was higher than anticipated. ACF had grown from a one year £2 million initiative in 2002 to a multi-year £12.5 million programme by December 2006.

The high demand has meant ACF is likely to have committed its main investment fund by March 2008. ACF currently has a £1 million Business Development Grant fund available to community organisations looking to develop ideas to generate sustainable income streams.

Stephen Thake, Reader in Urban Policy at London Metropolitan University and who led the evaluation team, said: “Since its launch in 2002, ACF has invested £8.7 million in grants and loans to voluntary organisations.

“This demonstrates two facts: firstly that ACF has proven there is a demand for patient capital and, secondly, shows that, through its support programmes, it as been successful in building the capacity of organisations to become investment-ready.”

In addition to providing evidence of demand for investment, the report has also shown how successful the patient capital model can be.

Taken as a group, it was found the turnover of the ACF’s investees more than doubled, growing from £3.3 million to £6.9 million in the two years after their offer of an ACF Patient Capital award - a109% growth rate. In the previous two years, turnover of the same group of investees had grown by less than 50%.

The investees also significantly increased their capital assets, which in the subsequent two years after a patient capital investment, increased from £1.3 million to almost £6 million, an increase of nearly 400%.

Thake said: “Patient Capital linked with tailored support programmes has the potential to build the resilience of community-based organisations, allowing them to be better placed to deliver social returns for the communities in which they serve.”

Unveiling the findings of the evaluation in London this week [5th February 2008], the report also recommended a number of changes to the programme to enable ACF programme to meet the needs of the voluntary and community sector even further.

Thake said: “The evaluation highlighted that community organisations are more fragile than anticipated. This has prompted us to recommend that the support programmes need to be extended further and the ACF seen as a two stage programme with a pre-development and an implementation phase.

“While in the pre-development phase greater emphasis would be given to the ensuring that the organisation was in a sound footing before embarking on its proposed project.”

Elsewhere, the report also stated that measuring social returns proved more difficult than anticipated. Thake said: “That is an issue that is applies to the whole of the Third Sector – and indeed the public sector too. There is a need for social investors to work together to develop a more robust and effective methodology.”

Jonathan Lewis, Chief Executive of the ACF, said: “It is important for the ACF to carry out an independent evaluation so that we can address any factors of the scheme that need re-evaluating. More importantly it also shows what aspects of the scheme are proving successful, giving us a good platform to develop them further.

“If the ACF can continue to develop at such an increasing rate, the ACF will be able to establish itself and the ACF programme as permanent elements in the social investment marketplace.”

Ends

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Notes to Editors

ACF – developed by the community sector and funded by government, is an ambitious investment fund that supports growth and success in community enterprises.

By enabling community organisations to generate a variety of sources of income, the ACF helps reduce dependency on grants and allow organisations to determine their own futures.

With the appointment of new chief executive, Jonathan Lewis, the next stage of its development will see the ACF become the most effective, most innovative and most expert community support and investment company in the country.

What makes the ACF different?

The ACF differs from other community investment programmes because its investment package provides support and back-up to direct and nurture its investees. The ACF ensures that all investees receive expert advice from a highly skilled network of Supporters, and that they receive the right training to develop skills that will help them make the successful transition from bright idea to sustainable enterprise. By taking this level of responsibility for its investees, the ACF can invest in community organisations with little or no track record that other investors might consider too risky.

Furthermore, the investment process is as flexible, non bureaucratic and simple as possible in order to make it accessible and appealing to prospective investees. The ACF invests a lot, and expects a lot from its investments, with returns based on financial growth and social impact.

The ACF Investments

The ACF was launched in December 2002 as a £2 million, one year programme but in the following two years and with three injections of further funds it has grown to become a £13.5 million, multi-year programme.

The ACF has focused on investing in small to medium to large-sized organisations active in multiply-deprived neighbourhoods or working with marginalised communities. The organisations in the ACF portfolio exhibit great diversity in terms of motivating forces that inspire them, the activities they undertake, the length of time they have been in operation and their geographical spread.

The ACF portfolio includes:

• Moss Side and Hulme Community Development Trust, Manchester
• Lister Steps, Liverpool
• Action for Business, Bradford
• E-MPLOY, London
• Centre for Music and Arts Technology, Birmingham

The ACF provides a combination of investment and support. The investment funding takes the form of Patient Capital, Seed Capital and Working Capital. The support takes the form of Business Development Grants (BDG) and independent experts, referred to as Supporters, who provide strategic advice.

Some of the investment schemes include:

The Main Investment Fund: offering a mixture of loans and grants totalling £50,000 to £750,000 along with a comprehensive package of support.

The Managed Workspace Fund: provides loans and grants of £50,000 to £750,000 to community enterprises looking to set up a managed workspace facility.

The Business Development Fund: provides a grant of up to £15,000 for community enterprises that are in the early stages of development.

For more information on ACF visit www.adventurecapitalfund.org.uk