Embargoed for Thursday 9 July 2009

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Community sector organisations in receipt of patient capital grow faster than general charities, according to an independent evaluation of the impact of the Adventure Capital Fund.

Published today by the Centre for Social Evaluation Research at London Metropolitan University, the report found that ACF funded organisations had, as a group, increased their income, reserves, assets and organisational capacity. The gross income of ACF investees grew by over 160 per cent in the six years that straddled their ACF investment. This compared to the average of 19 per cent for all similar sized registered charities.

Furthermore, ACF investees – which receive a combination of loans, grants and business support – also saw a 62 per cent increase in income in the three years after they received their investment, compared to an average rise of just five per cent for all similar sized registered charities over the same length of time.

Stephen Thake, Reader in Urban Policy at London Metropolitan University and who led the evaluation team, said: “These findings show that by engaging in social enterprise community-based organisations can become more sustainable, and help create a thriving civil society fit for 21st century.”

He added: “However, it is not easy. Although access to capital has improved, it appears that the revenue income of community-based organisations has been squeezed by a reduction in grant funding coinciding with a shift by public sector commissioners towards larger service contracts. If the ACF model is to achieve its full potential there needs to be a better match between the long term commitments that community-based organisations are asked to take on, and their ability to secure adequate revenue streams.”

David Carrington, Chair of ACF’s evaluation committee, said: “Organisations in the ACF portfolio reported a decrease in funding for  those community development activities that cannot be readily turned into social enterprises. It is important that, in the drive for financial sustainability, that the crucial contribution that these activities make to local well being are not overlooked.”

Elsewhere, the evaluation also provides evidence that the process of establishing a successful social enterprise is more demanding than anticipated and cites the value of ACF’s professional and business support  as investees develop social enterprises. “The Government has understood the importance of this development and provided organisational and project development programmes alongside other financial investment programmes including Futurebuilders (England), SEIF and the Communitybuilders programme,” the report said.

Stephen Bubb, Chair of the ACF, said: “These findings are hugely important for ACF as we start work in delivering the Government’s £70m Communitybuilders programme, which will provide a combination of grants and loans for voluntary organisations embarking on projects that promote involvement in local decision making.”

He added: “ACF was launched as a bit of an experiment, hence the idea of ‘adventure’. There were many people who questioned whether community groups would be interested in investments consisting of a mix of loans and grants.

“This independent evaluation demonstrates these people were clearly wrong. It proves the case that we have been able to contribute to tangible social change, which is why we’re looking to attract more and more funds to enable us to have an even more far reaching impact.”

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.

In April 2008, the ACF won the contract to manage the Futurebuilders fund, a £215 million fund investing in service delivery by third sector organisations. Futurebuilders also manages the Social Enterprise Investment Fund (SEIF) on the behalf of the Department for Health, working in partnership with Partnerships UK. The SEIF provides investment to help new social enterprises start up and existing social enterprises grow and improve services.

ACF have recently been appointed to deliver Communitybuilders, a £70 million government programme for investment in community-led organisations looking to develop long-term viability.

ACF will be delivering Communitybuilders on behalf of Communities and Local Government and the Office of the Third Sector. 

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 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