As with many charitable trusts the Barrow Cadbury Trust has traditionally used its endowment to invest in mainstream investments, albeit with an ethical dimension, and has used the income generated to fund our programme work. In 2010 the trustees decided to use part of the endowment to further the aims of the Trust through investments in charities and social enterprises, aiming to achieve both a social and a financial return with the funds. Since 2010 Barrow Cadbury Trust has allocated £3.8 million to 20 different social investments. Barrow Cadbury Trust currently holds 15 social investments totalling £2.4 million.
We recognise that social investment is not always the most suitable solution, but is one of a range of financing options.
The Barrow Cadbury Trust actively works with other social investor networks to share learning and knowledge.
The growing market in social investments and the limited capital we have available to invest means that we will target our funds to build a portfolio that will both further social justice and develop the social investment market. We aim to hold a mixed portfolio and are unlikely to make a number of investments of a similar nature. You can read about Barrow Cadbury Trust’s current social investment portfolio here.
What will we invest in?
Barrow Cadbury Trust will consider investments which further the aims of the charity to promote social justice, in particular, but not exclusively, in line with the following interests of the Trust:
- Criminal justice
- Gender justice
- Racial justice
- Economic justice
In particular Barrow Cadbury Trust will make social investments which:
- Provide risk capital to test new models of investment and working, often to organisations which find it difficult to raise the risk capital elsewhere
- Catalyse present and future funding
- Support the development of social investment infrastructure.
What return is Barrow Cadbury Trust looking for?
We aim to recycle our funds and to recover all our financial investments together with a financial return, as well as secure a clear and measurable social return. Barrow Cadbury Trust does recognise that social investments may attract a lower financial return than financial investments for the equivalent risk, but we believe this will be compensated for by the social return.
What type of investment will Barrow Cadbury Trust make?
We will consider all types of investment vehicles, including loans, social impact bonds, equity and quasi-equity investments. Where the investment is in a product of a local nature we are more likely to invest if it is based in or around Birmingham.
Will Barrow Cadbury Trust invest in non-charitable companies?
We will only make an investment in a non-charitable company in the following circumstances:
- The social mission of the non-charitable company is in line with the aims of the Trust.
- Any private benefit arising from the investment is necessary, reasonable and in the interests of the Trust.
- Any private benefit is not excessive and the investment is clearly for the public benefit.
- Where there is the opportunity for considerable economic gain by the company then the Trust will benefit from that gain (e.g. by holding an equity stake rather than advancing a loan).
How much will Barrow Cadbury Trust invest?
We would expect to invest between £50,000 and £250,000 in any one product.
When would we want our investment back?
We do want to recycle our funds so we will consider how our money will be repaid before entering into the investment. The lack of a secondary market for social investments means that it is often not possible to sell the investment so we would expect the terms of investment to set out how the investment would be repaid. Within the overall portfolio we will expect to hold a balance of short and long term investments – in practice the current investments have a repayment period of between 3 and 10 years.
How to apply
If you think that your investment fits the criteria outlined above then please send a summary of the investment proposal to Mark O’Kelly, Head of Finance and Administration. This should be a maximum of two pages and should cover the following information:
Details of your organisation
- Type of investment
- Amount of investment (both the total you are looking for and the amount you are asking BCT to invest)
- Length of investment and how it will be repaid
- Financial return
- How the investment will be used
- Details of the social return
- How the social return will be measured and reported on
We will then assess these details and contact you for further information should we wish to proceed to a further stage.