– Geetha Rabindrakumar, Head of Social Sector Engagement, Big Society Capital
Services supporting people with mental health issues are needed more than ever, when 1 in 4 adults and 1 in 9 children in the UK have a mental health problem. Mental health issues are often compounded by related issues around homelessness, unemployment, poverty and criminal justice.
The current environment of funding constraints and increased demand has brought huge challenges for the voluntary sector providers to continue their unique role in addressing mental health needs. Despite these challenges, or perhaps partly because these challenges are forcing a different way of thinking, we see a growing number of charities using or considering social investment as another tool for financing their work. Our role at Big Society Capital is to help increase access to investment for charities, increase confidence in use of social investment, and also to work with the sector to develop new ways in which social investment can be used to tackle social issues, including mental health. We’re really pleased to be working with the Mental Health Providers Forum to support members with information & resources to explore whether social investment could be relevant for your needs.
So what is social investment? To be clear, it’s not a grant. It’s the use of repayable finance to achieve a social as well as a financial return. This means that the investor will expect their money back (usually with a financial return on top), but crucially, the investor is motivated by the social impact that is created by the work of the charity.
Social investment is not going to work for all charities, or be relevant for every activity your organisation carries out. When does it work? In a nutshell, if your organisation can use upfront funds (the investment) in order to both create more impact and generate future increased income which can repay the investor, and create a surplus for your charity to help its longer term sustainability. This might be as simple as buying a building with a loan which is then used to deliver services and generate income through contracts, grants or rents.
Why would a charity consider social investment? Could it help you deliver your mission more effectively? The main benefit from using investment is to create more impact more quickly than if you’d just relied on ongoing income or built up enough reserves over years to fund a project or expansion. Charities we speak to are also positive about wider benefits beyond just access to money, which involve new ways of partnership working and other support and expertise from investors, a sharper focus on sustainability and impact measurement which in turn improves services delivery.
Within mental health, social investment could be relevant for funding:
1) Purchase or adaptation of property to deliver care and support services, including housing for homeless and other vulnerable people.
2) Scaling new innovative services or income generation (e.g. through social enterprise, potentially also delivering employment opportunities for people with mental health needs)
3) New services that shift spend from acute services to preventative and/or community-based services focused on outcomes. This could take the form of Social Impact Bonds (“SIBs”), where a commissioner pays for outcomes in a payments by results contract, and an investor provides upfront finance to enable a provider to deliver the service.
It’s encouraging to see the diversity of charities and social enterprises that can now use social investment. For example, The Art House in Sheffield, a charity which put together a package of loans (including from Charity Bank and KeyFund) alongside grants to buy a building to run pottery and art classes which generate income to support their work with people with mental health issues.
Or Big White Wall, an innovative social enterprise providing mental health support online paid for by public sector and individual subscriptions, with investment to scale their work from a fund run by Impact Ventures UK.
It’s also good to see innovative commissioning, for example by Newcastle Gateshead CCG which commissioned a social impact bond to improve wellbeing outcomes for patients with long term conditions through social prescribing. The Ways to Wellness SIB is being delivered through 4 local voluntary sector mental health providers.
Social investment can often require a shift in thinking at leadership and governance level, and early engagement of Boards is needed to get buy in. Recognising this, we have recently launched a campaign (“GET INFORMED”) in partnership with the Charity Commission and others to support charity trustees and social enterprise directors to understand the opportunities and risks around social investment.
We know this landscape can feel unfamiliar and complex for most providers coming to this new. As a starting point, we’ve developed with MHPF an introductory guide on the basics around social investment. We hope this is helpful – do get in touch if you’d like to know more, or if you’d like to discuss broader ideas in which social investment could be used to create better outcomes in mental health.