10 Ideas for Change: Local philanthropy & local social investment
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.
http://edgefund.org.uk/
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.
Young people at a YTFN event
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.
http://www.ytfn.org/
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.
6. CROWDFUNDING FOR GOOD
Crowdfunding platforms – in which the ‘crowd’ is invited to fund a project – are launching thick and fast in the UK. Two of the biggest players are Kickstarter and Spacehive and recent success stories include the funding of Homebaked’s oven – a local project in Liverpool which brought in funders from the US and further afield – and Grow an Entrepreneur for tomorrow – an empty shop project for young entrepreneurs which is gathering local support in High Wycombe. The first collaborative crowdfunded regeneration project launched recently, uniting Manchester Council and Red Rose Forest to campaign for funds to transform a public square in the city.
A makeover for Stevenson Square Green in Manchester is the UK’s first collaborative crowdfunded regeneration project
7. PEER-TO-PEER LENDING FOR INDIVIDUALS AND SMALL BUSINESS: LendLocal
LendLocal is a platform to help local lenders connect with borrowers unable to access mainstream finance. Similar to the Kiva model in the US, LendLocal will work with Community Development Finance Institutions (CDFIs) in the UK. CDFIs will make loans to local entrepreneurs or people in need of finance and will then open the loan up to private capital through the LendLocal platform. Aiming to end the reliance on payday bankers and support and develop the local microfinance market, LendLocal is planning to launch later this year. http://www.lendlocal.org.uk/
8. COMMUNITY SHARES
Increasing numbers of local enterprises are turning to their local communities for funding. The amount of equity raised through share offers in the UK trebled to £9m in 2012 and large-scale share offers in particular are on the rise. The vast majority of share offers undertaken by community enterprises have been in the renewable energy, retail, pubs and brewing and food and farming sectors. A new website of resources and news on community shares has recently been launched by the Community Shares Unit with funding from CLG. http://www.communityshares.org.uk/
9. LOCAL ENDOWMENT FUNDS
We can carry on hoping that economic growth will solve the problems of poverty or we can invest directly to build shared value in our poorest communities. In his recent report on rethinking regeneration, Julian Dobson called for a Local Endowment Fund that could invest in people-centred approaches to regeneration. Focused on the most disadvantaged neighbourhoods, the fund would be available to community-led organisations and social landlords working at neighbourhood level to draw down when they need it, in order to fund local action that is innovative and that helps share learning. Unlike many previous regeneration funds, it would be spent by those working directly within the communities that are most in need and would be available with minimum bureaucratic monitoring.
Read more here.
10. LOCAL SOCIAL ENTERPRISE INCUBATORS
Local social jobs can help regenerate our local economies. Two new local social enterprise incubators will offer intensive support to social start-ups in Birmingham and the north of England. Hub Launchpad and Social Incubator North are the latest recipients of the government’s social incubator fund. Social incubator North has been set up by Key Fund and will work in collaboration with social enterprise partnerships in the north of England, while Hub Launchpad, which launches on 7th June, is a partnership between local housing association Accord Group, Hub Westminster, The Long Run Venture and architectural firm 00:/. Find out more here.
