A model for Social Impact through Investment?

The Enterprise Homes Group is seeking to make homelessness history, ensuring no-one gets left behind by an unfair and unjust housing system. We are looking to achieve this through a self-sustaining business model that uses commercial investment in property to generate revenue to provide charitable services to those in need of assistance in getting back above the housing line.

We a charitable organization and business that is seeking to move away from traditional forms of fundraising and instead find ways – through enterprise – of generating income and revenue. Our aim is to become financially free through investing in property in order to be able to focus clearly on our social mission of tackling homelessness. We are seeking to do this by raising investment capital that we will invest in commercial ventures in property in order to generate income. A fixed portion of this will be paid back to the equity investors and the rest will sustain the core charitable activities of the organisation.

As such we are seeking equity investors who share in our vision to make homelessness history. This includes corporate organisations, private investors and landlords and financial institutions involved in the property sector who are share in the growing desire within the sector to see more social responsibility. We believe that there is an obvious link around this between individuals and organisations involved in making homes available to people (through lending or actual bricks and mortar) and the organisations tackling homelessness. This is an opportunity for the private property sector to be involved in making homelessness history without actually having to get involved directly themselves.

Why do we see the need to move from a traditional charitable approach?

We see the need to move away from a traditional approach because of the following:

• Too much time spent trying to raise funds, filling out applications and reporting back with not great levels of success; and
• Being at risk of compromising our values and approach in order to fit in with funding criteria; and
• Having the freedom to be able to develop and expand when the need arises without first having to go out and find additional funding and putting things on hold in the meantime; and
• Creating a legacy for future generations to come in which our unified pathway out of homelessness is sustainable in the long run.

What is the alternative plan?

We have now developed a 10-year business plan that will enable us to achieve those goals and involves raising 5 million pounds in investment capital. We will subsequently invest this into the UK property market to create an ongoing revenue stream which will:

• cover our core costs,
• provide for some immediate expansion; and
• leave enough surplus to be able to cover the costs of repaying the investment without having to sell off any of the assets that have been purchased along the way.

At this stage we are confident that we could set something up that would bring in a competitive return of maybe somewhere in the region of 3%-4% on a 5 to 10-year interest only basis. We believe that this could be a low to medium risk investment since it would be tied up in bricks and mortar and generating surpluses that will form cash reserves which add to the security.

What mechanisms might assist us in achieving these goals?

We currently have two issues that we need to resolve and with which we would like your help.

1. Raising 5 million in capital investment – through crowdfunding with peer to peer lending? JVs? CSR? Social responsibility in the property sector among landlords/investors? Financial institutions? Anything else you can think of that could be a model for social impact through investment aimed at the property sector? We think that the property sector literally holds the keys to making homelessness history and so this is a great place to start.
2. Putting in place a financial mechanism that would enable this to be rolled out wider to individuals in the form of a Social Impact ISA or charity bond. This would be a model for social impact through investment that would be more widely available. People with smaller amounts that they would like to invest, could not only get a competitive return on their savings but also to do so in a manner that is socially responsible and has a high level of social impact. This has to be FCA regulated and may require partnership with an existing provider or model. Any thoughts?

We believe that creating a model for Social Impact through Investing could be the future of the Social Sector to compliment or even at times replace charitable funding.

We need suggestions as to what would be the best means to achieve these goals and how it might work. If you have any thoughts or would like to chat further with us about this, please get in touch at [email protected]

Matt Lambert is the chair of the board of EHG Property and the CEO of the Enterprise Homes Group. You can find out more about the work of the charity by visiting https://enterprisehomesgroup.org.uk