Independent evaluation prompts major rethink on how to support third sector organisations

Friday 23 July 2010

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.”

Download the Investing in Thriving Communities here.

---------------------------------------------------------------------------------------

1. For further information or interviews, please contact The Social Investment Business press office:

Liz Banks - 0207 842 7726/ 07809 504072  liz.banks@socialinvestmentbusiness.org

Nicola Jones - 0207 842 7755 nicola.jones@socialinvestmentbusiness.org

2. The Social Investment Business, the fastest growing social investor in the UK, exists to help social enterprises, charities and community organisations do more of what they do best – supporting people and communities most in need. We help organisations prosper by providing innovative financial solutions, business support and long term strategic thinking.

www.thesocialinvestmentbusiness.org @TheSocialInvest

3. The Social Investment Business manages Government funds on behalf of the Office for Civil Society, the Department of Health and the Department for Communities and Local Government, with over 1,000 active investments. These range from £3,600 to help a small organisation bid successfully for a public sector contract, to £6.7million to help a large national charity establish and develop innovative new services for children and young people.