10 Ideas for Change: Local philanthropy & local social investment
May 10, 2013
Finding new sources of funding as the public sector retreats is a key challenge for local economies. The beginnings of a shift towards localised sources of finance is driving change across the UK. Here’s ten of the best ideas for ensuring that finance works harder for local areas:
1. FUNDING RADICAL CHANGE: The Edge Fund
The recently launched Edge Fund aims to turn traditional approaches to philanthropy on their head. Rather than funding charities or identifying need, it aims to take Oscar Wilde’s lead and ‘try to reconstruct society on such a basis that poverty will be impossible’. Thus the focus of its funding is organisations working for systemic change and those challenging injustices. The projects it supported in its first round of funding include the Autonomous Centre of Edinburgh, a self-managed social resource centre for those trying to make a better society and the Brighton and Hove Unemployed Workers Centre.
2. CHANGING BANKING HABITS: Move Your Money
In the wake of the financial scandal, campaigns to help people move their money from big banks to smaller local institutions have been gathering pace. In the States the Move Your Money project has seen over 10 million accounts moved from the largest Wall Street banks to community banks and credit unions. Local state governments in New Mexico and elsewhere have shifted their funds state funds and pensions to local financial organisations. The UK’s Move Your Money campaign is hoping to change the habits of councils here. It is currently developing an ethical banking toolkit for local authorities aimed at strengthening local authority support for credit unions, building societies, mutual and ethical banks. The ethical banking toolkit will critique the role of ratings agencies and treasury management services in directing council cash-flows towards ‘too big to fail’ financial institutions, and discuss an alternative framework that begins to redirect monies to socially useful activities at the local community level.
3. MISSION-RELATED INVESTMENT
In US philanthropic foundations are starting to think clearly not only about how they spend the 10% of their endowments they give away each year, but where they invest the other 90%. Mission-related investment is the latest big idea in US philanthropy and a website has been set up by Rockefeller Philanthropy Advisors – Confluence Philanthropy – to bring together foundations interested in ensuring their missions and their investments are aligned. Some foundations – like New York’s North Star Fund – are starting to move their investments from big banks to social enterprises. If this were to take off in the UK, it would redouble the power of philanthropy at the local level.
Read more about it here.
4. SEEDING PHILANTHROPY AT A YOUNG AGE: YTFN
YTFN is the youth arm of the Funding Network, which runs Dragon’s Den-style events bringing charities and potential donors together. The aim of YTFN is to seed the idea of philanthropy at a young age by putting on fun events for young professionals to come together and fund small-but-inspirational social change projects. Over the last five years, networks of young people in London have nurtured 36 organisations including Hackney Pirates, UKYCC and FoodCycle via its events. It will be celebrating its 5th Birthday with a fundraising event at the Rag Factory in East London.
5. PEER-TO-PEER LENDING FOR BUSINESS
As small businesses are increasingly locked out of mainstream finance, many are turning to peer-to-peer lending. A new report from Nesta, Banking on each other, assesses the market for peer-to-peer business lending and in particular the largest peer-to-peer business lending site, Funding Circle, which, it says, has made around £100m in loans to over 1,700 companies to date. Lancashire council was the first local authority to invest in a peer to peer lender last year when it invested £100,000 in Funding Circle.