Lessons from the Adventure Capital Fund

The Adventure Capital Fund has recently published the fifth and final external evaluation report on its third sector investment activities, Investing in Thriving Communities. The evaluation has been carried out by London Metropolitan University.

Even for those not interested primarily in social enterprise access to finance issues, the report makes interesting reading. The Executive Summary alone is probably sufficient (it’s a very well done and comprehensive Executive Summary) but the full report contains some buried nuggets.

ACF has grown from a £2.8m, one-year ‘demonstration programme’ originally established in December 2002 – “to test different approaches to enabling community-based organisations to grow and become more sustainable” – to an ongoing £14.4m portfolio which now includes delivery of the Dept of Communities & Local Government’s Managed Workspace Fund, the second phase of the Futurebuilders (England) programme, the Dept of Health’s Social Enterprise Investment Fund, and the Communitybuilders programme.

Although much of the report will not surprise anyone who has been working at the coal-face of the sector, it offers a good source of evidence/intelligence on broader development issues that many will find useful to inform their own papers/briefings/bids.

For example:

  • The ACF Business Development Programme, aimed at organisations considering making an application to the main investment programme, offers a small grant and input from an independent strategic advisor. This model has been especially successful, offering a low-cost/low-risk model that has enabled applicants to commission stratgeic planning, support with business planning and feasibility research, and support to raise skills and improve systems.
  • ACF applicants that have completed the projects they received investment for have grown faster (in terms of gross income) than general charities/enterprises of the same size that have not received investment.
  • Successful support packages need to combine loans, grants and professional advice/business support (“independent strategic advice”).
  • Organisations that are attempting to develop new social enterprise initiatives while also continuing to deliver their key activities/services have found this “much more demanding in time, resources and complexity than anticipated by the funding agencies, the ACF, or the applicants themselves”.
  • Not surprisingly, perhaps, the ACF portfolio does not have a strong presence of organisations involved in community development activities (probably, it can be assumed, because it is very hard to to turn community development into an income-generation activity that can be traded as opposed to a cost-centre that requires funding).
  • There is an inverse relationship between the number of expressions of interest and successful applications. The larger the number of applications the lower the proportion of successful applications.
  • The report acknowledges that even for SEs the public sector plays a key role in largely determining the shape and nature of marketplace.

Incidentally, this ACF report, like the recent report on the Dept of Health Social Enterprise Investment Fund (Social Enterprise — Making a Difference: A Guide to the Right to Request), appears to indicate that Birmingham SEs are making little use of these national investment opportunities.

Both the DoH SEIF and ACF have had only two successful Birmingham-based applicants (and I think a further two in both cases from elsewhere in the region).

While we don’t know how many unsuccessful applications there might have been, this certainly looks disproportionately low from the second city’s perspective.

What’s driving the new marketplace in health & social care?

The presentations from ISE’s recent — and excellent — Healthy Social Enterprise Conference are now available to download on the ISE website.

The conference was technically a project dissemination event but the speakers and presentations went significantly beyond that and anyone looking to get an overview of how current policy in health and social care (such as ‘personalisation‘, the ‘right to request’ legislation for DoH employees wanting to explore the SE potential of specific services, and the DoH Social Enterprise Investment Fund — worth £100m and open to existing as well as new-start health & social care operating on a not-for-personal-profit basis) is shaping a new ‘social marketplace’ in the provision of these services will find the presentations extremely helpful.

Cllr Len Clarke (Birmingham City Council) gave a fascinating opening address to the conference that set out, with just a handful of key statistics, the factors that are making a re-examination of health and social care delivery models inevitable.

For example:

  • Fifty years ago there were 8 people working to every retired person. Now, there are only 4. In fifty years time there will be only 2.
  • Birmingham found that its thirty elderly homes cost 2.5 times more each to operate than independent sector homes.
  • In home care, Birmingham was spending 70% of its budget on 35% of its services — this inevitably led to a need for services to be rationed.
  • An ‘industrial model’ of 9-to-5 delivery is inflexible and has disproportionately high unit costs. Birmingham’s health and social care costs are increasing by almost 80% a year — and yet the DoH budget control figure offers an increase of only 0.7% a year…

Given this scenario, an examination of the potential for third sector, social enterprise and independent sector delivery was pretty inevitable.

But for those in the sector seeking (or advocating) innovation, new delivery models and greater social and community benefit, it is also salutary to understand the extent to which third sector commissioning is actually driven by the need for cost savings. This can only become more the case as the anticipated public spending cuts deepen.

In this climate, says Cllr Clarke, Birmingham City Council cannot just wait for providers to emerge — there must be a degree of ‘market shaping’.

BSSEC absolutely agrees with this view. For several years now we have been arguing that third sector commissioning must, if it is to be meaningful, go hand-in-hand with a planned and systematic expansion of the marketplace of providers.

This requires systems, structures and processes that enable joint planning — i.e. that bring together social enterprises, voluntary & community sector providers, and service commissioners in the context of a suitable operating framework.

To fail to do this will turn the clock back to the kind of unplanned laissez-faire provision that preceded the NHS.

Soapbox, signpost & commentary!

Welcome to BSSEC’s new blog. It has taken us a while to get round to doing this but finally it’s here — a new soapbox, an additional source of information, and a place for comment and commentary on all things social enterprise. We hope you enjoy it — and that you’ll want to participate.

By offering a quick and flexible method of adding news and comment and signposting readers to interesting things elsewhere, we think the blog will also help us to expand out updates function.

So, welcome to the BSSEC blog — we hope you find it provocative and interesting, and that you’ll keep coming back.