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Supporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

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Page 1: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Supporting social enterprise and community business

NatWest Social & Community Capital Impact Report 2016

Page 2: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Our 2016 impact in numbers

“Receiving the loan was probably the most significant event in the history of Lochaber Hope because it has led to so many other changes in our organisation.”Lochaber Hope, Fort William, Scotland

Impact areas …

Lending …

to£3.7m 21 organisations

Customer ratings …

4.9 out of 5 4.8 out of 5On loan’s significance for social mission

On loan’s significance for financial sustainability

Income and financial inclusion

Arts, heritage, sports and faith

Employment, training and education

Citizenship, community and well-being

Housing and local facilities

61% 4%18% 4%14%

Would recommend us to another social organisation

100%

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NatWest Social & Community Capital Impact Report 2016

Page 3: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Hello

It’s my huge privilege to update you on the work of NatWest Social & Community Capital and to report on how we’ve helped more social enterprises get access to the finance they need to grow.

In last year’s Impact Report we produced an overview of three years of activity as seen through the eyes of our customers. We used some inspiring case studies to illustrate the change we were making alongside survey data to give an honest view of our performance. It was the first time we had attempted our own impact report and during its production we identified some improvements we could make to the way we collect and report data.

Over the last year, we have developed a new impact measurement framework, an explanation of which forms the basis of this report. This framework will enable us to better assess and track the social impact our customers are having and the difference our support makes.

Alongside the baseline data in this report, I’m delighted to be able to demonstrate a growing customer base, a wider geographical spread of loans and greater visibility in the social enterprise marketplace.

As a board, we are ambitious to enable more social enterprises to make a positive impact in UK communities and I would like to thank NatWest again for generously providing staff and back office support to enable the charity to expand its operations.

Simon JacobsChair of Trustees, NatWest Social & Community Capital

“As a board, we are ambitious to enable more social enterprises to make a positive impact in UK communities.”

NatWest Social & Community Capital is a trading name of RBS Social & Community Capital, Registered in England No: 03901460, Registered office: 280 Bishopsgate, London EC2M 4RB. Charity Registration No: 1079626.

Security may be required. Product fees may apply. Over 18s only.

On behalf of the Trustees, I’d like to thank the management of the charity, especially Megan Peat, for driving the clear progress we are making on a number of fronts. This has been the first year with a new team in place and I’m delighted that we are now seeing our new strategy bear fruit.

Finally I’d like to pay tribute to our social enterprise customers. They are an amazing bunch, who enrich our communities and at the same time inspire us. This year they’ve given us some fantastic customer feedback too. I’d like to thank them on behalf of the board for their support and look forward to helping even more social pioneers in 2017.

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Page 4: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Case Study: Get Cycling

Jim McGurn, CEO of Get Cycling Community Interest Company, talks with great passion about what cycling can bring to those enabled by the organisation’s specially adapted bikes, “People with disabilities need bikes more than anyone else; they need the independent mobility, and it’s good fun, fresh air and it’s exercise.”

Leann Branton volunteers at Get Cycling’s events at nearby Applefields School for young people with disabilities. She says she does it because she loves to see the children smile when they’re behind the handlebars, “Feeling the freedom of the bicycle – there’s nothing like it for these children. Wind in your hair, feeling it in your face, they just absolutely love it.”

Leann’s own daughter, Lucy, clearly conveys this delight when her mum cycles her round the playground on a bike adapted to fit her wheelchair.

Seven years on from founding the organisation, Jim was finding he couldn’t keep up with the demand for his bikes and cycling events. The business was stagnating, without the capital needed to innovate and grow. It was at this moment that NatWest Social & Community Capital were able to help with access to finance. This capital gave Get Cycling the boost it needed to gain momentum again and become the UK’s biggest enterprise in disability cycling. Jim says of the loan, “It made a huge difference to what we’ve been able to do for people with disabilities all over the country.”

To see Get Cycling’s story on video go to: www.natwest.com/scc

“People with disabilities need bikes more than anyone else; they need the independent mobility, and it’s good fun, fresh air and it’s exercise.”

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Page 5: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

A snapshot of 2016Looking back over 2016, I’m delighted with the performance of NatWest Social & Community Capital and how the team is working together to support disadvantaged communities. At the same time however, I want us to go further and faster to make sure we are doing all we can to address the many needs of local communities. It’s a tension that every charity should have – a desire to celebrate success while also recognising that there is much more we could achieve.

There is so much to celebrate this year. It’s our first full year as a new team and we’ve been able to make more loans available to more social enterprises. We’ve revisited the mission and vision of the organisation and signed off a new strategy. We’ve built awareness of our offering by launching a new website and sharing some powerful customer stories.

Particularly encouraging has been the feedback from our customers. It highlights the journey that we’ve been on to get better at what we do and we’re delighted to hear that customers rate us highly for our services. My team, John Murray and Tracy Thomson, deserve a huge pat on the back for their diligence and customer focus.

Another major development this year has been our new impact framework. It has started to give us a much richer picture of the impact we have and how our loans make a difference, some of which we’d like to share with you in this report.

But for every brilliant social enterprise we are able to support we know there are many more that we could help who either don’t know we exist or are just too fragile to take on loan funding. That is what lies behind our new strategy to increase the number of organisations we work with, especially at an earlier stage, and widen the level of support we can give them.

Finally, I wanted to express my gratitude to our volunteers, from both outside the bank, and within. I’d like to say a special thank you to our Credit Panel for giving of your time and skills regularly to support our customers. We couldn’t do this without you!

I’m hugely proud of the progress we are making and I hope you enjoy reading about it in this report.

Megan PeatCEO, NatWest Social & Community Capital

“There is so much to celebrate this year. It’s our first full year as a new team and we’ve been able to make more loans available to more social enterprises.”

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Page 6: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

NatWest Social & Community Capital’s mission is to enable social enterprises to make a positive impact in UK communities. We achieve this by providing flexible loan finance to social ventures that are unable to access mainstream funding. We typically provide loans of between £30,000 and £750,000, along with business support, to viable social enterprises who make a positive impact in their community.

This year, in line with our new strategy and theory of change, we’ve improved our loan offering to reflect the needs we have identified in the market. Our new ‘Early Stage Loan’ provides more flexible, early stage funding for innovative young social enterprises. In addition, our new ‘Social Impact Loan’ enables organisations creating above average social impact (as measured by our impact framework) to focus more on their mission by reducing their interest rates.

We also identified that our customers needed practical support in non-financial ways too, and have therefore developed a suite of value added services in areas such as impact measurement, PR and marketing.

Loan offering

NatWest Social & Community Capital is an independent charity, supported by NatWest. We were set up in 1999 to help bridge the gap between grants and mainstream finance for social enterprises and responsible finance institutions. In 2015, NatWest provided a £10 million grant from the bank to enable the charity to expand.

Who we are and what we do

Community Business Loan Social Impact Loan Early Stage Loan

Loan amount £30,000 – £750,000 £30,000 – £500,000 £30,000 – £50,000

Interest rate range

6% to 8% per annum 4% to 8% per annum 6% to 8% with up to three years interest roll-up

Term range 7–10 years max. 10 years max. 10 years max.

Normal security requirements

Debenture/bond & floating charge

Debenture/bond & floating charge

Debenture/bond & floating charge

Arrangement fee 1% 1% None

Social impacts Must evidence social impact and report regularly

Must have high social impact and report regularly

Must have high social impact and report regularly

NatWest Social & Community Capital Impact Report 2016

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Page 7: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

NatWest Social & Community Capital’s Credit Panel

The Panel meet twice a month to assess loan applications, enabling organisations to apply year round and receive quick responses. Made up of volunteers from both inside and outside the bank, they bring a wealth of expertise and experience from banking, business and social enterprise sectors.

What makes an organisation eligible for a NatWest Social & Community Capital loan?

Financial Sustainability: Enterprises are able to demonstrate that they have a sustainable business model and are able to service any borrowing.

Social Impact: Enterprises should be able to demonstrate a positive social impact and should be reinvesting their profits for a social purpose.

Suitable Governance: Enterprises should have a specific social enterprise business structure, and a suitable management structure and governance procedures.

Declined by a Bank: Enterprises should have been declined for a loan by a mainstream bank or be ineligible because they do not meet bank lending policy.

Our priority areas:

Employability, education and training for those furthest from the labour market

Provision of services to the most disadvantaged

Community regeneration

Intermediary lending to those unable to access mainstream finance

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Page 8: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Approved loans to 11 organisations (£496,500 drawn)

Overall portfolio value for 21 organisations loaned to

An overview of 2016 lending

£971,500 £3.7m

Average loan amount at an average 6.5% interest rate (loans drawn)

Community development financial institutions (CDFIs) are private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth and other disadvantaged people and communities join the economic mainstream.

Funds available to lend at year end

£250,000

£8.2m

Portfolio split (by value)

CDFIs 84%

Social enterprises 16%

NatWest Social & Community Capital Impact Report 2016

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Page 9: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Fort William

Erskine

York

Sheffield

Derby

Birmingham

London (x6)

Plymouth

Ebbw Vale

Liverpool

Preston

Blackburn

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Page 10: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Case Study: The Women’s Organisation

As a painter and decorator, Caz Jackson found it really tough being a woman working in a male-dominated industry and came up against constant obstacles. She dreamed of starting her own enterprise and hiring other trades-women like herself, but didn’t know how to go about it.

Thankfully, she learned about The Women’s Organisation, who exist to enable and empower female entrepreneurs, especially those from disadvantaged backgrounds. They were able to give her advice and support as she planned her business, and a start-up grant to get going.

The organisation’s inspiring CEO, Maggie O’Carroll, recognises that, “in the UK, we simply don’t have enough businesses started by women, and there’s a massive loss to the UK economy as a result.”

Since its foundation in 1996 the organisation has reached and supported a staggering 50,000 women within Merseyside and the Greater Manchester region. To continue their momentum, they found themselves in need of working capital last year, and NatWest Social & Community Capital were able to quickly meet this need. Maggie said, “The loan facility came at a critical time for us which really made it possible to see us through a key period. Social & Community Capital recognised that not only could we deliver economic gains, but social gains as well.”

Caz now runs a fully fledged painting and decorating business, giving employment to female joiners, electricians and plasterers. She credits The Women’s Organisation as the foundation for her success, “If it wasn’t for them, I wouldn’t be where I am now.”

To see The Women’s Organisation’s story on video go to: www.natwest.com/scc

NatWest Social & Community Capital Impact Report 2016

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Page 11: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

“The loan facility came at a critical time for us which really made it possible to see us through a key period. Social & Community Capital recognised that not only could we deliver economic gains, but social gains as well.”

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Page 12: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Our impact2016 customer impact areas (by value)

What customers did with their loan (by value)

In helping to achieve their social mission

How customers rated the significance of their loan

In helping to improve their financial sustainability

1 5

1 5

Income and financial inclusion

61%Arts, heritage, sports and faith

4%Employment, training and education

18%Citizenship, community and well-being

4%Housing and local facilities

14%

“Sole of Discretion was a start-up business in 2016, and without the loan from Social & Community Capital would not have been able to be established. ”Sole of Discretion, Plymouth

4.8

4.94.3

3.6

Onward lending 84%

Business growth 8%

Asset purchase 5%

Premises purchase, move or refurbish 3%

NatWest Social & Community Capital Impact Report 2016

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Page 13: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Some quotes from our customers about how it was to work with us

“What an exceptional team; community focused with corporate skills and years of combined experience.”Crisis, Erskine, Scotland

“Flexibility has been the key in this relationship and willingness to consider an approach which supports LRS in the long term.”London Rebuilding Society, London

“The team have an excellent understanding and passion, this is always evident and creates a feeling of support for your organisation and its success.” EBO Quality Signs, Ebbw Vale, Wales

What our customers say about usWe’re keen to continue improving how we support our customers. We asked our 2016 customers to rate us on a scale of 1 to 5 against the criteria below (with smaller hexagons showing last year’s scores) .

How likely would you be to recommend our service to a fellow social organisation?

1 54.74.3

How would you rate the quality of service from the Social & Community Capital team?

1 54.83.7

How would you rate the team’s understanding of your organisation’s vision, mission and values?

1 54.944

How would you rate the terms of your loan?

1 54.44.1

How would you rate the speed of the application and loan offer process ? (Not asked in last year’s survey.)

1 54.6

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Page 14: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

How we measure our impactFollowing the production of our 2015 Impact Report we developed a new framework to measure our impact in a more systematic way. We wanted our new impact framework to enable us to better assess potential customers against our mission, and to help us to better define, measure and evaluate:

1. The impact our customers are able to have as a result of the finance we provide.

What we’re featuring in this year’s reportWe wanted to use this year’s report to lay out the baseline data for our customers, demonstrating how they currently score against our impact framework.

These figures, which can be seen on the opposite page, show our initial assessment of the fundamental elements which should be in place for effective social impact, such as the quality of a customer’s management structure and how clearly they define their mission.

Our aim is that, through our support of these organisations, we can help them make progress in these areas, and that data in future impact reports will demonstrate this.

What we’ll bring to you in next year’s reportWhen we agree the terms of a loan with a customer, we also agree a selection of key metrics that will be used to monitor and evaluate a customer’s social impact. The first three are standard metrics that we intend to measure across all of our customers (where relevant) – income growth, number of individuals/organisations helped and jobs created following our loan. We then select a small number of metrics that are specific to the customer’s impact area and beneficiary group. These are taken from IRIS’s metrics and Big Society Capital’s outcomes matrix. For example, for a customer providing disability cycling, we might choose to measure the number of people ‘who are able to take part in appropriate opportunities for physical activity’.

As this evaluation system is new, our customers have not yet been measuring their impact against these metrics for a full year, but in next year’s Impact Report and onwards, we look forward to using this data to further bring to life the social impact we are enabling our customers to have.

2. The impact we’re able to have on our customers’ efficiency and effectiveness through our finance and wider support.

NatWest Social & Community Capital Impact Report 2016

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The baseline dataOrganisation overview metrics

These are assessments made by our loans officers to inform and build consistency in our investment decisions.

Social impact measurement metrics

Based on New Philanthropy Capital’s Impact Assurance Classification*, these metrics enable us to assess how developed a customer’s approach is to planning and measuring their social impact. This provides a good indication of the actual impact they’re likely to have, and so can be used to inform our investment decisions.

Aligning with our missionWe assess how aligned a customer’s area of impact is with our own mission and priority impact areas.

Management qualityWe assess how well structured and experienced a customer’s management team and processes are.

Financial track recordWe assess how financially robust a customer’s organisation is.

Scalability potentialWe assess how much potential a customer shows for innovating and scaling.

Mission clarityHow clearly a customer understands and communicates their mission and the impact they want to create.

Output measurementHow comprehensively a customer is measuring their outputs.

Change measurementHow well an organisation is measuring their outcomes and impact.

Social impact classificationBased on the above metrics, we classify the overall stage of development a customer is at in terms of their social impact mission and evaluation.

Stage 2

Baseline metrics: average score across our 2016 customers.

Average score across our 2016 customers (1 to 5)

To see more on how this is calculated, please refer to pages 20 and 21 of New Philanthropy Capital’s report*.

*New Philanthropy Capital’s Impact Assurance Classification is detailed in their impact review for the KL Felicitas Foundation, “Investing For Impact: Practical Tools, Lessons and Results” by Abigail Rotheroe, Peter Harrison-Evans, Plum Lomax. www.thinknpc.org/publications/investing-for-impact-practical-tools-lessons-and-results/

To see more on how these impact practice scores are calculated, please refer to page 71 of New Philanthropy Capital’s report*.

1 32

1 32

1 31

Page 16: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

EBO’s story is one to be proud of. When a sign manufacturer in Ebbw Vale went into administration, Stuart Newell and Jonathan Bell wanted to establish another high quality sign business, and offer employment to people managing disability in a part of Wales known to be an employment blackspot.

Jonathan and Stuart rapidly needed to access the working capital to get the business up and running, and that’s where NatWest Social & Community Capital were able to step in. Stuart said he was delighted to find a lender “who understood what the company stood for; not just your high street bank that looked at you solely as a commercial enterprise.”

Consequently EBO was able to establish itself as a social enterprise, not only providing employment, but owned by all the employees (in fact, EBO stands for Employee Buyout). Team member, David Eacott, had been on Jobseekers’ Allowance for over three years before EBO. He said going for the interview there was “the best thing I’ve ever done”.

Two years on, the 11-strong team at EBO are proud of the reputation they’re building for the quality of their products, their growing number of nation-wide customers and the potential growth that lies ahead of them.

Case Study: EBO Quality Signs

To see EBO’s story on video: www.natwest.com/scc

“We were looking for funders who understood what the company stood for.”

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Page 17: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

Over the last five years the social finance market has grown significantly. The challenge for us at NatWest has therefore been to make sure that our support for social enterprise has relevance and value in meeting the needs of potential customers.

During the development of NatWest Social & Community Capital’s strategy, we undertook extensive research to map the market and to look at where Social & Community Capital could make the most difference in supporting UK social enterprises.

The result was the creation of the new fund offerings and suite of value added services detailed in this report. The funds will better enable Social & Community Capital to support smaller, younger social enterprises with more flexible terms, as well as discount pricing for those achieving strong social impact. Meanwhile, the provision of value added services will help strengthen customers’ businesses to make them more sustainable – which is good for them, good for the growth of the social lending sector and good for the economy.

Over the next year, Social & Community Capital plans to further extend its geographical reach. Whilst maintaining a visible role in Wales and Scotland as well as England, Social & Community Capital will also expand into Northern Ireland. We aim to help support the development of the social enterprise sector in this market, alongside our colleagues at Ulster Bank and Social Enterprise Northern Ireland.

NatWest Social & Community Capital’s lending priorities for 2017 will be to lend directly to more social enterprises prioritising those that reach the most disadvantaged people and communities. We at NatWest are inspired by the organisations that do this vital work on the ground, proud that we can help them and determined to increase our support in the year ahead and beyond.

Looking ahead

Mark ParsonsHead of Community Finance & Social Enterprise, NatWest

“The funds will better enable Social & Community Capital to support smaller, younger social enterprises.”

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NatWest Social & Community Capital Impact Report 2016

Page 18: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

NatWest has been the leading mainstream financial services champion of the community finance and social enterprise sector for over 20 years. We have established a range of partnerships, initiatives and resources aimed at strengthening this sector.

Wider NatWest support for the social enterprise sector

NatWest SE100 Index NatWest is a co-founder of the NatWest SE100 Index. The index is the only real-time market benchmarking tool for social enterprises. For full details on how to sign up, please see: www.se100.net/user/register

NatWest SE100 Social Business ClubSE100 members automatically become members of the NatWest Social Business Club. We host regular events for social enterprises under the SE100 Social Business Club banner in regions across the UK.For details of the club and events, please see: www.se100.net/business-club

Starting a Social Enterprise We have produced a guide with SEUK on how to start a social enterprise.See: www.socialenterprise.org.uk/start-your-social-enterprise

NatWest SE100 Awards Our annual awards recognise the best of social enterprise in the UK across a range of categories including Growth; Social Impact; Leadership; Resilience; Storytelling and Newcomer. For details on past winners and how to apply, please see: www.se100.net/awards

Other partners include:

ACEVO

ACOSVO

Community Transport Association

Development Trust Association Scotland

Locality

Senscot

Social Enterprise Northern Ireland

Social Enterprise UK

NatWest Social & Community Capital Impact Report 2016

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Page 19: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

We would like to thank our board of trustees:Simon Jacobs (Chair) Thom Kenrick Bernie Morgan Maya Prabhu Andrew Robinson David Thomas

Company Secretary: Helen Miller

“The flexibility of Social & Community Capital in supporting our activities, and securing a new relationship with a private partner for our Home Improvement Scheme, enabled us to reach and assist many more beneficiaries. Furthermore the staff at Social & Community Capital really have made sure they understand what we are trying to do, and work with us to achieve those goals throughout the development of this new partnership.”London Rebuilding Society, London

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Page 20: Supporting social enterprise and community business · PDF fileSupporting social enterprise and community business NatWest Social & Community Capital Impact Report 2016

This Impact Report was printed by Calverts, a co-operative print production house.

Further information

For further information about NatWest’s wider support of community finance and social enterprise, contact:

Mark Parsons, Head of Community Finance & Social Enterprise

[email protected]

07713 185920

For further information about NatWest Social & Community Capital, contact:

Megan Peat, CEO, NatWest Social & Community Capital

[email protected]

020 7672 2307

www.natwest.com/scc

NatWest Social & Community Capital is a trading name of RBS Social & Community Capital, Registered in England No: 03901460, Registered office: 280 Bishopsgate, London EC2M 4RB. Charity Registration No: 1079626.

Security may be required. Product fees may apply. Over 18s only.