Should we stop talking about investment readiness? | Good Finance

Should we stop talking about investment readiness?

Blog | 9 March 2018

If you’re visiting this website it’s probably because you were thinking about social investment and wanted to understand more about it.

And if so, I’m going to guess that you’ve encountered the terms ‘investment readiness’ and ‘investment ready’ at some point along your journey.

Just to make sure we’re all on the same page, investment readiness refers to whether or not your organisation is ready to take on investment. How solid your financial modelling is. How well your governance structures are set up. How clear and rational your business plan is.

Having these things in place before you raise investment is vital and that’s why there have been several programmes over the past six years to help you put these things in place before you raise investment.

At Social Investment Business, we’ve managed many of these programmes on behalf of public funders. These include the Investment and Contract Readiness Fund and Big Potential.

In total, these programmes have distributed £40.5m of grants to 677 charities and social enterprises. Almost a third of them – 245 – have already gone on to raise investments or win contracts worth a total of over £1 billion. This is a great outcome and a large number of organisations have obviously benefited from the support of these funds.

However, we wanted to delve a little bit deeper to understand more about what the funds did and how similar programmes could be improved in the future.

We hope we can now move on from talking about investment readiness and focus instead on helping organisations to be more resilient. Regardless of whether or not they raise investment, the resilient organisations are the ones that will be in the best better position to improve the lives of the people they work with. And that’s what we think matters most.

We interviewed over 50 people, held a number of regional workshops and looked at the data to see what more we could learn. The findings can be found in our full report – Strength in Numbers - but the key takeaways are:

  • We need to put the needs of charities and social enterprises at the centre of the future programmes by focusing on improving resilience, not just getting them ready for investment.
  • We must find new ways to embed knowledge within charities and social enterprises and reduce their dependency on grants and external providers through better peer-to-peer support and use of data.
  • We should design new programmes based on what we know works. This means delivering multiple interventions and combined packages of support that are built on long-term relationships.
  • We must take more account of the wider system in which charities and social enterprises operate. This means more focus on markets, commissioning and the lived experience of the people we exist to support.

This leads us to the key recommendation of the report; we think it’s time to put to bed the phrase ‘investment readiness’ and adopt a new approach to support programmes for charities and social enterprises.

Now, this is not meant to be a negative assessment of the programmes and the outcomes they’ve helped to achieve. Far from it. Hundreds of fantastic charities and social enterprises have been assisted to raise investment or win contracts that have helped them change the lives of the people they work with.

However, we must recognise that framing support around a singular outcome – raising investment – is not helpful. The traits that can make an organisation ‘investment ready’ are valuable regardless of whether or not investment is raised.

We hope we can now move on from talking about investment readiness and focus instead on helping organisations to be more resilient. Regardless of whether or not they raise investment, the resilient organisations are the ones that will be in the best better position to improve the lives of the people they work with. And that’s what we think matters most.

By Maria Tarokh, Social Investment Business

Last updated
9 March 2018