Are you Eligible for Social Investment?

So, you’ve decided to set up a new business. If you have social impact at its heart, you need to explore social investment options before you decide on your legal structure.

So, you’ve decided to set up a new business. If you have social impact at its heart, you need to explore social investment options before you decide on your legal structure.

Let’s illustrate what we mean with a real-life example.

One of our clients, Factory of Creativity, took out a loan for social investment in order to convert from a limited company into a charity.

William set up Hope Mill Theatre (now called, Factory of Creativity) after surgery on his vocal cords ended his career as a performer. He wanted to continue his passion for theatre, and after producing a few shows, found he got a kick supporting others’ creativity.

Is There a Market Need?

Before you even consider loans for social investment, you’ll need to do check there’s a market for your idea.

When William moved to Manchester, he could see there was a need for an accessible venue for emerging theatre companies. He started to research, and meet and talk to people at the Royal Exchange and other theatre companies, including people who ran theatres off from the mainstream West End in London, and asked how they got started, and where they got their social investment from. He was armed with knowledge, an undeniable youthful passion, and a little nativity!

The market need was there, but that was just the start…

Do Your Research: Will you need loans for Social Investment?

A little research at the start can help you later to secure the right kind of money for your enterprise. Yes, there is such a thing as the ‘right’ kind. You need to think about the best legal structure for your business, in order to have access to the right social investment loans, grants or even charitable donations.

As a new business, with no assets, you will struggle to get mainstream banks to invest in you. But if you’re a Community Interest Company, a Social Enterprise, or a charity with a trading arm, you don’t have to rely on mainstream finance to get loans for social investment.

Make sure you can Access Loans for Social Investment

Key Fund has supported thousands of organisations in Sheffield, Yorkshire and the Midlands. Social investment isn’t dependant on secured lending.

It wasn’t until William had ran Hope Mill Theatre for three years, that he realised he had limited their options around social investment as a limited company.

As William explained: “Three years in we looked at the legal structure. We spoke to other theatres, and many turned into charities. We spoke to the council too, saying we’d like to do outreach and community work, but we didn’t have the resources or time in terms of how our structure operates. They said they only support charities.”

William also knew their 140-seat theatre was vulnerable, with the building owned by a private landlord. To realise its community ambitions, he knew they’d need to change their legal structure.

“The journey to becoming a charity took 18 months, because of the complexities and conditions.”

It involved taking on trustees and board members, and crucially they needed a social investment loan to support the take-over.

The charity had no track record yet, but one of its new board members heard about Key Fund and found they were eligible for funding.

Think About Social Impact

Making a positive difference will be a driver behind your business if you want to qualify for social investment.

Like William, you might not realise until later down the line, how the structure of your business can limit your social impact.

When he was planning the charity, he knew they were able to secure their building because it was in an area of social deprivation: “We knew the importance of having a cultural offer here because we were the only cultural offer.”

Before they became a charity, they couldn’t offer ‘pay as you feel’ schemes, or pay for local children who couldn’t afford tickets to access their theatre or move into their educational offer.

Social Investment Realised his Ambition

With social investment loans and grant support, the team leased a new space, 50 yards from the theatre, and refurbished it into a community hub, with performance space. It offers play reading sessions for the community and is home to the Hope Mill Theatre School, that will offer courses for 4–18-year-olds; 50% of places will be free for parents who can’t afford it covered by the team’s fundraising work.

Hold on to your Values

When you’re running a business, financial pressures can lead to you losing track of why you set it up in the first place. Hold on to your values. If your work makes a true difference to people in your neighbourhood, the right social investment can keep you on track.

Social investment has not only helped secure the future of this innovative theatre enterprise, it’s expanded and deepened its impact.

As William said: “We always come back to our values and our ethos of why we’re doing what we’re doing. That long journey of transitioning to a charity was the perfect journey to widen our work and give back.”

Sheffield Social Investment

Did you know that Key Fund is itself a social enterprise? We are values driven. As Sheffield social investment experts, we can help you live by yours. We operate across Yorkshire, the North and the Midlands. Loans for social investment don’t need to be difficult. Get in touch, and see how we can help.

Skip to content