Growing interest? Mapping the market for social finance in the youth sector

Published: August 2011 Publication Type: Publication

Authors: Bethia McNeil, Cynthia Shanmugalingam, Sophie Moullin

The 11,000 organisations that comprise the voluntary and community youth sector (VCYS) are under unprecedented pressure. This report considers the potential for social finance to not only address under-capitalisation, but also to grow the capacity and entrepreneurialism of the sector.

Findings are based on a survey of nearly 100 leaders in youth sector charities and social enterprises, as well as in-depth telephone interviews with four leading social investors, and 14 youth sector organisations.

Nearly one in ten of the youth sector organisations surveyed identified themselves as ready for social investment at present and 20 per cent of organisations expect to receive up to five per cent of their income from social finance in three years, which could total up to £5 million.

The report argues for the creation of a dedicated social finance retailer for the youth sector. The body will offer a range of financial and non-financial products. The report makes three priority recommendations to the sector, saying that VCYS organisations need to:

  • Tell a strong story about value: Inconsistent and weak evidence of impact hinders the sector from telling a potentially strong story about its added value, both in social and in real financial terms
  • Create new ways to collaborate: Responding to increased competition may require greater collaboration. Transitioning to new business models and telling a strong story about value requires a scale and capacity that many organisations be unable to reach acting alone.
  • think their business models: The majority of VCYS organisations still rely upon grants and donations. Many require both financial and non-financial support, both to design and to transition to alternative business models.

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