Social Enterprise gets Finance Access

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Mandelson pledges action over Union BlacklistingA new one year programme to help social enterprises access risk finance is being launched today by the National Endowment for Science, Technology and the Arts (NESTA) and the Office of the Third Sector (OTS). The £90,000 programme aims to incentivise investment in social enterprises and ensure that a stronger social enterprise sector emerges from the recession.

Social enterprise has been hailed as one of the most exciting emerging sectors in the UK, contributing at least £8.4 billion to the economy every year. However social enterprises can find it difficult to access the finance needed to grow. Evidence suggests this is because some social entrepreneurs may have low levels of financial literacy and their businesses are not always ‘investment ready‘. Government’s commitment to develop an investment readiness programme was reaffirmed in ‘Real Help for Communities’ action plan in February this year.

NESTA’s Public Services Innovation Lab is now working with the OTS to develop a year long Social Enterprise Access to Investment facility designed to give social enterprises the best advice to help them access risk capital. The facility will offer a success fee that will incentivise brokers of advice to help social enterprises access funds.

These fees will be performance based and only payable to investment readiness providers in the event of social enterprises successfully accessing risk capital. The aim is to spread the model of success fees in the developing capital market for businesses driven by more than just the financial bottom line.

Jonathan Kestenbaum, Chief Executive of NESTA said

“Social enterprise is the UK’s most exciting up-and-coming business sector. But in the absence of tried and tested tools to guide social enterprises, there is a need to find new ways of bridging the gap between corporate and non-profit access to finance. This new resource will provide the evidence that social enterprises can achieve sustainable growth with the right kind of support”.

The project will also act as a one year programme to provide insight into how investment readiness may be sustainably financed in the future. In turn this will increase the quality of social enterprise investment propositions, their chances of success and the appeal of social enterprises as investment vehicles.

Campbell Robb, Director General of OTS said,

“This new programme is extremely exciting and innovative. It will illustrate the real value of investment readiness support not only to social entrepreneurs but other crucial stakeholders in ways that we hope will stimulate further, long-term, investment in this area.”

More details about the Social Enterprise Access to Investment programme will be available following a seminar on the 10 June with Investment Readiness Providers, social entrepreneurs, and other stakeholders.

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