Shift Design is a research and innovation charity. Working alongside Esmée Fairbairn Foundation, CAF Venturesome and UnLtd, Shift sought to explore the role of alternative forms of social investment as a way of enabling greater social impact.
Shift reviewed the role of 'standard’ debt, which is commonplace in the market, yet can often be seen to restrict innovation due to its repayment and accounting methods, which suit financing social purpose organisations perceived as lower risk. Through exploring types of capital most suited to different types of social purpose organisations, the research aimed to establish whether there is a latent need for more patient forms of capital, such as equity and equity-like finance .
In September 2019, we approved a £20,000 grant to undertake market research to assess the demand for ‘equity-like’ finance. The first phase of this research was published in June 2020. This report was a key contributor to Connect Fund’s call for ideas for Access Foundation’s £18m ‘Flexible Finance for the Recovery’.
Impact
- Challenge
For many social enterprises seeking investment, there are limited alternatives to loans that can be out of reach due to cost. This is particularly the case for social ventures at the early stage of the market.
- Impact goal
In line with our approach to social investment, this work meets our objective on learning and sharing to establish a greater collective impact.
We look forward to seeing how social investors leverage this research to test new forms of flexible and patient finance and increase the supply of impact first investment to fill the funding gaps, thereby better meeting the needs of a more diverse set of social purpose organisations.
Duncan Fogg, Commercial Lead, Shift
Ben Smith, Head of Social Investment, Esmée Fairbairn Foundation
We are one of the few Foundations who already take the approach of impact-first, co-designing investment instruments to further social impact creation. We wanted to support the development of evidence based on the needs of social purpose organisations. And we believe Shift's research will be hugely valuable in helping us and the wider social investment sector to learn how to create efficiencies that will help to make flexible investment products such as equity and quasi-equity more accessible.
Duncan Fogg, Commercial Lead, Shift
Over the last 5 years, Shift has learnt first hand some of the challenges trying to access more flexible, patient capital to fund our social ventures. Building on our lived experience, we welcomed the opportunity to work with Esmee, CAF Venturesome, and Unltd to explore the disconnect between the underlying need for patient capital amongst social purpose organisations, and the perceived lack of demand for it. We look forward to seeing how social investors leverage this research to test new forms of flexible and patient finance and increase the supply of impact first investment to fill the funding gaps, thereby better meeting the needs of a more diverse set of social purpose organisations.
