Or, why surveying rural social enterprises wasn’t the best way to understand their social investment needs… Dave Thornett from the Key Fund and freelance consultant Adrian Ashton ask how to reconcile diverging levels of investment between our towns and countryside.
With a strong track record of providing finance to thousands of social sector organisations since it was founded in 1999, the Key Fund has learnt a great deal from its clients about how best to offer support and help them raise finance.
Our experience suggested that social enterprises in rural areas were under-served. We wanted to better understand whether this was a ‘real’ issue, rather than simply ‘bad luck’ in failing to generate interest from rural social enterprises. Happily, an opportunity to do something about this came in the shape of The Connect Fund.
Establishing a baseline was the first task. We asked freelance consultant, Adrian Ashton, to look at existing literature and develop a robust working hypothesis to assess to what degree rural social enterprises not accessing social investment really is a ‘live’ issue. If so, what can be done about it?
We wanted to have confidence in independent research findings that would be credible to all stakeholders. You can read ‘Borrowing in the Wild’ for a review of social investment from a rural perspective. Our use of an external consultant was very deliberate. We were aware that one outcome of this work would create a demand for resources that the Key Fund is well-placed to deliver.
What emerged from Adrian’s investigations is that rural social enterprises are not all that different to their urban counterparts, after all. They face the same barriers to accessing social investment. They also have similar profiles to ‘traditional’ rural businesses with regard to having limited profitability and lower aspirations for future growth.
The real surprise is that social investors appear to be the third choice for social enterprises seeking investment, regardless of location. High street banks, and personal loans, are seen as offering better terms.
Where do we go from here? The first step is to test the findings through third party interviews with rural enterprises in Cumbria, Northumberland and Lincolnshire. This will be followed by a campaign to challenge negative perceptions of social investment. We are fortunate to be able to take advantage of Big Society Capital’s Let’s Talk Good Finance programme to achieve the latter.
One of the other key findings was that rural social enterprises need more of an eco-system of support. We will explore how the prospect of investment could be used to catalyse local peer support networks within the sector. Alongside this, we will highlight the need for more awareness in local councils, especially planning departments, to encourage and nurture the future growth of social enterprises in rural locations.
As well as helping rural enterprises to better understand social investment, we will provide voluntary sector intermediaries and other providers of sector support, with the tools to advise these enterprises. We hope to foster personal and organisational links between grassroots organisations and the social investment landscape.
Effective solutions can only be found when there is a good understanding of the issues. If you have something to add to this process, we’d love to hear from you.