The second of six monthly articles written by Social Investment Scotland looks at the world of social investment and why both early stage and more established organisations can benefit from it. Chief development officer Roger Moors examines how investment is used and how the process starts with just a phone call

In the fifteen years that Social Investment Scotland has been operating across the country we’ve provided over £53 million worth of loans to the sector. In that time we’ve seen all manner of social enterprises emerge, develop and flourish, delivering all kinds of wonderful social and environmental impacts. We’ve deliberately tried to keep the process of applying for investment as accessible as possible and because there are no application forms, charities, social enterprises and community organisations need only pick up the phone to start a conversation.

It’s at this stage that we try to establish where an organisation is on their developmental journey and what their investment needs may be. Over the last few years, and supported by the Scottish Government, we’ve been delivering a series of social investment workshops called Early Days and Changing Ways. We use this workshop title because we understand that for organisations that are relatively young and may have been trading or supplying services for just a short while, their challenges will be different from those that are more established and where they may have relied on grants in the past.

Social investment can play a key role in helping these organisations grow and develop

We recognise that the transition away from grant dependence isn’t easy and requires support to develop a more enterprising culture, but also have an appreciation that loan finance can be an enabler to wealth creation and sustainability. The support needs for early stage organisations may be more developmental and operational focussing on the skills needed to get an enterprise functioning properly. Either way, social investment can play a key role in helping these organisations grow and develop and we regularly work with other partners such as Firstport and Just Enterprise to help provide additional ‘enterprise’ support.

At SIS we believe that keeping the language simple and understandable is key to overcoming any barriers there might be in exploring social investment. In broad terms, there are only three categories of use for investment and they are to purchase assets, help with cash flow and enabling early stage organisations reach a position of sustainability. Most if not all the applications we receive fall into one of these three areas.

Buying assets, as the terms suggests is about buying ‘things’ that the business needs whether that’s a building, a piece of machinery or perhaps a vehicle. The second, ‘helping cash flow’, is simply about providing the finance that bridges the time between delivering a product or service and getting paid for it. The final category ‘reaching the point of sustainability’ is about understanding where, how and when an organisation will reach the point where more cash is coming in than’s going out. Where there’s a sound business case, social investment can be crucial in helping an organisation get to this point and with it helping to support the delivery of social impact.

Next month, we take a look at what it means to be investment ready and the support provided by SIS.

Any questions? Get in touch with us on 0131 558 7706 or [email protected]

Roger Moors is chief development officer at Socia Investment Scotland.