From Growing Interest to Interest Grown: Is the youth sector ready for social investment?

a discussion paper by Gemma Rocyn Jones published by The Young Foundation (March 2013)

Introduction

Local authority expenditure on services for young people fell by £307.5 million between 2010–1 and 2011–12. During this period, social sector organisations saw their funding reduced by 14 per cent.¹ Over the same time, the social finance market has grown rapidly to over £600 million offering funding to generate both a social and financial return. The potential of this emerging breed of social investors to support youth sector organisations to innovate and scale, was the subject of a 2011 report by The Young Foundation, Growing Interest.²

We found evidence to suggest that social finance could offer both financial breathing space and the freedom to innovate to a sector that had suffered significant funding cuts. Moreover, this opinion was shared by one in five youth sector organisations surveyed for the report, who expected social investment to have become an integral source of funding by 2014.

However, this number fell to just one in 10 when asked whether they were immediately ‘ready’ for investment. Our interviews with youth sector leaders, and The Young Foundation’s wider experience of the social investment market, enabled us to identify three key areas that organisations needed to strengthen to access social investment: their capability to understand the requirements of social finance and how to articulate their impact; their capacity to develop new skills and adopt new business practices; and their confidence in their future sources and volume of income – in other words, the financial sustainability of their operating model.

These findings formed the basis of an investment readiness programme targeting voluntary youth sector organisations, which The Young Foundation ran between October 2011 and March 2013 on behalf of Catalyst.

The programme was designed to build the sector’s awareness of social investment and address the three challenges identified by our earlier work. We did this through a series of seminars, masterclasses and one-to-one advice. This report outlines the lessons from 18 months of working with over 350 youth sector organisations. Was our assessment of investment readiness needs correct? Is social investment living up to its potential in the youth sector? And if not, what lessons have we learned?

Our observations are based on qualitative feedback from group sessions and one-to-one discussions and quantitative data from a survey on sources and need for financing. The report aims to further understand what the appropriate role for social investment might be within the youth sector as well as recognise the support needed to realise this potential.

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¹ http://www.education.gov.uk/rsgateway/DB/SFR/s001114/index.shtml
² Growing Interest: Mapping the market for social finance in the youth sector, The Young Foundation, July 2011

Full text (PDF 22pp)

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