Rethinking Innovation in Social Finance Report

Rethinking Innovation in Social Finance Report

Check out our ‘Rethinking Innovation in Social Finance Report’ here.

The ‘Financing Social Enterprise in Ireland – Models of Impact and Readiness’ consortium are delighted to launch the ‘Rethinking Innovation in Social Finance Report. After 2 years of collaboration with the social enterprise sector, support organisations and social finance expertise we are celebrating our work in the Central Bank 30th November 2022.

The purpose of the project is to contribute to the development of the social finance sector in Ireland by developing financial instruments for social enterprises and supporting the wide range of social enterprise organisations working within any area that falls under the National Social Enterprise Policy definition. At present, there is no tailored financial instrument or specific statutory budget that fits the needs of the growing social enterprise market. Moreover, there is a lack of investment readiness among social enterprises. This project seeks to address these challenges through a participatory approach beginning at the research phase and continuing throughout the project implementation. The outreach, marketing and networking actions will aim to inform and get ‘buy-in’ from stakeholders in the social enterprise landscape.

You can read more about the project through our report here.

Philanthropy and the potential for Multiplicity of Impact

Philanthropy and the potential for Multiplicity of Impact

As an all-island body, Community Finance Ireland (CFI) is among those uniquely positioned to recognise the part Philanthropy has played in the economic regeneration and rural development of Northern Ireland and the southern border region over the past 40 years. Organisations such as the International Fund for Ireland, and The Atlantic Philanthropies became household names to those within the CVSE, given the millions gifted to communities in the name of employment creation, peace and reconciliation.

Yet a common denominator in every philanthropic fund is the finite level of capital available. As one catchy advertisement reminds us; “When it’s gone, it’s really gone!” To many this inevitability is understood, unless you have developed a total dependency on that form of support, without ever having been encouraged or facilitated to diversify between philanthropy and earned income.

Presently in Ireland (2022), the social finance instruments available to the CVSE sector take the form of short term bridging, and longer term loans (up to 15 years).  Across the island over the past 20 years, social finance providers such as Community Finance Ireland and Clann Credo have directly connected with communities and social enterprises to make well in excess of €200m in social finance available to groups. A good news story in itself.

Yet behind this figure is likely to be a similar quantum of request for support from potential projects which will have fallen outside the relatively flexible lending criteria in place for accessing social finance in its present construct. The bulk of social finance available today is sourced via the Social Finance Foundation, which in turn buys capital from the Irish Banks at an interest cost.

Thus, whilst these social finance providers are registered charities, both are charged interest on the capital they use, and carry risk on losses accrued. This dictates the level of risk appetite open to them in supporting projects which may be high on impact potential, but with little or no track record. The need to remain as credible, sustainable providers of social finance to the sector in Ireland overarches this policy.

Enter the idea of a capital source, seeking social impact first and foremost, and whilst repayments are not of paramount importance, it acknowledges the potential benefits accrued in the concept of recycling.

To date, a simplistic philanthropic model sees a gift made to a worthy cause, impact achieved once courtesy of this support, and the fund depletes over time.

A precedent set involves Community Finance Ireland partnering with another Belfast Charitable Society (BCS), whereby BCS made available funds for onward lending through the Building Better Futures Fund. By the end of the fund, CFI had facilitated BCS impacting 51 organisations, spread throughout Northern Ireland. All the capital was repaid, and available for use in other supportive causes.

By linking philanthropy with social finance, the possibility of this same altruism being recycled to have multiple social impacts across a variety of organisations that might otherwise never have been able to access repayable finance becomes possible.

Could Credit Unions be a source for wholesale Social Finance?

Could Credit Unions be a source for wholesale Social Finance?

According to , some 3.6 million members of the Irish Credit Unions affiliated to the Irish league of Credit Unions (ILCU) have amassed combined savings of €16.31 billion, with €4.89 billion being made available in loans to these same members (as of March 2021). Another 50 large Credit Unions are affiliated with the Credit Union Development Association (CUDA) whose member savings further bolster this asset base ( ).

The Credit Union structure is very much driven by a not for profit ethos, existing solely for the benefit of its members, not stock markets. As is the case with Community Finance Ireland, a Credit Union is owned by its members. They have no hidden administration or transaction fees, with notable flexibility regarding loan repayments.

On the face of it, the capital from the local Credit Unions, and the experience of Social Finance Organisations, with a greater regional and national focus, would seem like a match made in some higher universe!  The purest form of community finance some might say.

One sector serves (almost exclusively) the individual within the community and is replete with capital, whilst the other serves structured collectives within the community, and is continuously seeking to diversify its source of capital – ideally on terms and conditions in line with the not for profit ethos which its ecosystem prescribes to.

Left to its own devices, the Credit Union continues to show an eagerness to think outside the box. In recent years, the “It Makes Sense Loan” project endeavoured to afford the most marginalised in society access to the Irish financial system. Even more recently, the development of a mortgage product from elements within the CU movement underpins this ambition to push on.

Indeed it should be acknowledged that a number of Credit Unions have already reached out to Community Finance Ireland with a view to collaborating on a capital deployment partnership. However, it is apparent that success here is dependent on sufficient buy in from the Central Bank as regulator, given this could be another new departure in the Credit Union’s attempt to have their deposits achieve maximum impact and, indeed, greater return.

Rethinking Innovation in Social Finance

Rethinking Innovation in Social Finance

Our final event for our project ‘Financing Social Enterprise in Ireland – Models of Impact Investing & Readiness’ will be on 30th November 2022. We are finalising plans for our in person event in the Central Bank in Dublin from 09:30 until 11:15 on 30th November 2022.

You can register through the link here:

Ireland will demonstrate its commitment to making social finance ever more accessible to social enterprises of all shapes and sizes as it prepares to launch a report highlighting the findings of a research project funded by the EU Commission through the EaSI Technical Assistance Programme. The support measure also facilitated informative interactions with 13 other research projects across Europe.

Led by Rethink Ireland, this research consortium included Community Finance Ireland and Dublin City University, with support from the Irish Social Enterprise Network.

Starting with an argument that the existing suite of financial products available to the Irish social enterprise sector do not adequately meet the needs of all, the research group were tasked with exploring what other options are open to our colleagues in the sector across Europe. Might any of these facilities be replicated in Ireland? How difficult might it be to roll them out? If they were, would there be a demand among the market place? These and many other questions formed the basis of the research project.

Among the research findings, the consortium are scheduled to launch the piloting of a radical new financial product in 2023. A mix of repayable and non-repayable loans, together with crucial non-financial support, the product is primarily targeting first time borrowers from the social enterprise and community space. 

The new and innovative product (a first in Europe) will aim to introduce those with no security, little by way of trading record, but delivering respectable levels of social impact, to loan finance via a responsible, supportive approach. Roadshows Roadshows

The Irish Social Finance Eco-system is poised to introduce it’s first new financial product in over 20 years, following research undertaken by Rethink Ireland, Community Finance Ireland, and Dublin City University, in association with the Irish Social Enterprise Network.
Through a mix of repayable loans, non-repayable loans and crucially, non-financial support, the product is primarily targeting first time borrowers from the social enterprise and community space.
The new and innovative product (a first in Europe) will aim to introduce those with no security, little by way of trading record, but delivering respectable levels of social impact, to loan finance via a responsible, calculated approach.
This event aims to pump prime demand among the marketplace for hybrid loan grant supports of between €30k and €100k. Those involved in local authorities and NGOs supporting social and community enterprise, as well as early stage social enterprises, will find this information of benefit.
As importantly, the product promoters who are placing the finishing touches to what will be a pilot call for applications in 2023, are seeking feedback on the generic financial needs of social enterprise through this event which is one in a series across Ireland.

We are undertaking a roadshow across Ireland and want to hear about your experience and your feedback. Please join us at any of the following events:

Dublin – 19th October at 7.30pm
Cork – 20th October at  7.30pm
Donegal – 25th October at 7.30pm
Galway – 26th October 7.30pm
Online – 8th November 7.30pm