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Anna Southall OBE Barrow Cadbury Trust trustee and chair of its Investment Management Committee, spoke recently about the Trust’s social investment perspective at a Stock Exchange event organised by social venture charity Allia for Trustees Week. This blog is an abridged version of her presentation.


Why were Barrow Cadbury trustees keen to explore social finance opportunities? Some information about the origins and values of the Trust will shed some light on our interest.


The Trust was founded in 1920 by two Birmingham Quakers, Barrow and Geraldine Cadbury, energetic social reformers and generous philanthropists whose particular concerns were health, education and the criminal justice system.


Influenced by Joseph Rowntree, Barrow established the tax-paying Barrow Cadbury Fund (for those projects that fell outside the legal definition of ‘charitable’) alongside the charitable (and much larger) Barrow Cadbury Trust .


Our Quaker values inform the Trust’s ethical approach to its investments. Our approach is to use all our assets, such as our name, our expertise, our convening power, so not just the money.

We have a history of funding via loan finance. In the 1980s for example, we set up two revolving loan funds enabling unemployed people in the West Midlands to start their own businesses.


So the opportunity in 2009 to invest in the Peterborough SIB was timely. We had a century old interest in reducing reoffending. We also had a current track record of working with St Giles Trust so, in terms of partners as well as potential impact, it was a perfect entry point.


What do we look for when we invest?


Of paramount importance to us is the social impact of an investment. Our investments fall into three main categories:


The majority have been ‘programme related’, i.e interventions that we might under other circumstances consider grant aiding. As with our grantmaking, we actively seek to support pilot projects and ‘upstream’ or early interventions.


One of these is Bristol Together, a Community Interest Company that has developed a 5 year bond to raise working capital for buying and refurbishing properties, providing work and training opportunities for ex-offenders.

The impact of this investment is a 5% reoffending rate over 4 years (compared with the national average of 46%). What are the risks? There’s the possibility of overruns on costs and the Bristol housing market is much more unpredictable than London. There have also been cash flow challenges, but the project is currently on track to repay the bond.


We may seek general ways of supporting voluntary sector infrastructure: for example, we have made an equity investment as well as a loan for the purchase and redevelopment of a shoe-polish factory in Vauxhall, now known as the Foundry, a Social Justice and Human Rights Centre providing office and shared community space for 20 voluntary sector organisations.


And thirdly, the Trust is also interested in developing the social investment market; this motivated our investments in Golden Lane Housing for example.

(to be clear: I am referring to the 2013 bond issued through Triodos. We have also invested in the 2014 bond, but this was a mainstream investment in a corporate bond, made through our investment manager. We are delighted that this bond was successfully issued on the mainstream markets. )


We have an endowment of approaching £80 million, and have set aside 5% (ie £4 million) for social investment. Our pockets are not deep, but we are aware of the ‘kite mark effect’, the leverage that even a comparatively modest investment by Barrow Cadbury can afford an enterprise. Our early investment in the Peterborough SIB is a case in point.


Whether an investment relates closely to one of our programmes, or offers an opportunity to develop the market, above all we are keen to ensure significant social value, above and beyond simply savings to the public purse, valuable though they are.


Risk and return


In terms of risk and return, the potential social impact must justify the financial risk. We take a ‘whole portfolio’ view of financial return, so our appetite for risk varies with each investment. We are prepared to take risks, indeed, we believe we should, and have invested in a couple of ventures where we knew the risks were high. One has folded, and we will have to write off that loan, but the other is still making progress.


Whilst we seek considerable social impact, I would describe us as not financially ambitious. If we preserve the real value of the funds available to us over a 10 year period we will be satisfied. (More might be exciting! But it would cause us to question our risk appetite and whether we had the appropriate balance of social to financial return).


Do we become involved in the projects we support?

I have mentioned a couple of instances where I or a member of staff have joined the board of an organisation. This has merits:


  • it certainly aids our learning,
  • has been useful in developing informative reporting,
  • and can strengthen governance.

It fits our principle of using all our assets for social good, but we do not insist on it: of the 15 investments made to date, we only have this kind of direct involvement in three, all at the invitation of the organisation.


The question of impact on our grant making is interesting.


We believe that grant finance is gold dust and must be protected for things that can’t (or should not) be financed any other way.


We remain keen on blended finance (we have made Ethex a grant as well as a loan, for example).


Our grantmaking is in no way reduced in scale or ambition. It has, I suggest, benefitted from a sharpening up of due diligence and from our increasing expertise. We are better placed to discuss with grant holders the appropriateness (or otherwise) of their pursuing other forms of finance.


To conclude, social investment offers a very welcome alternative source of finance, but it is not the only answer and it’s not for everyone: I do worry about some of the rhetoric: criticising so-called ‘grant dependency’ isn’t helpful, nor is characterising charity trustees as ‘risk averse’ when they decide that such new forms of finance are not for them.


But for the Barrow Cadbury Trust, the beauty of social investment can be summarised in four points. We believe that:


  • Trusts and foundations can afford to take the financial risk off the shoulders of the delivery organisations.
  • Social investment can move money ‘upstream’ to earlier interventions, which we all know can be more effective in the long run and give better value for money, but which are sometimes not affordable in the short term.
  • We can help ‘unlock’ mainstream finance for social purposes (from pension funds, new money etc). For example we have now sold £70,000 of our original investment in Golden Lane Housing, bringing more social investors into the market.

And this touches on my fourth ‘beauty’: that the nature of investments is cyclical: as loans are repaid our capital is released so we can make further social investments.

You can watch Anna Southall’s full presentation, as well as other presentations at the event, on Youtube.


Debbie Pippard reflects on the lessons learnt from The Foundry initiative


What did we learn from our experience developing The Foundry  –  a new human rights and social justice centre which has  opened recently in London?


One of the first things the founding organisations – Trust for London, the Ethical Property Company, the Barrow Cadbury Trust and LlankellyChase Foundation did was to establish a ‘special purpose vehicle’ in 2011 to develop and run The Foundry.  Then we raised more than £11m in finance; bought, refurbished and extended a building, secured tenants, and created a centre that will provide a focus for social justice and human rights activity.


The Foundry will provide work and meeting space to organisations working on human rights and social justice issues. Set up as a social investment initiative, it is funded through a combination of equity investment and loans from independent trusts, the Ethical Property Company, banks and financial institutions.  We also intend it to be an asset to the local community and those from further afield, who will be able to use the cafe, visit exhibitions and events, and take part in a programme of learning activities.


So looking back over the development period, what made it all come together, and what lessons have we learned?


Undoubtedly it helped that the founder organisations knew each other well, had worked closely together, and were experienced and trusted partners.  This made it easier to create a shared vision, and has helped us through some tough moments.


This shared vision was established right from the start and has  guided our thinking on all aspects of the project; from the building design, to the planning, and to the associated education activities that will take place in the centre, to the detail of our performance framework.


And in a difficult economic climate, we were helped by having an investable proposition – a property-based development in the capital city, led by organisations with extensive experience in property investment, management and mission-related investment. These factors, combined with the clear social mission of The Foundry, enabled us to confidently approach other investors.


The lead partner in the management of the project, the Ethical Property Company, has over 15 years experience of developing and running shared office spaces with a social mission. Our advisors, particularly the architects, shared our enthusiasm for the project, and were chosen both for their architectural vision and for the added value that their experience of building and managing shared space brought to the project.




Undoubtedly the fundraising element of the project was our biggest challenge. We started the project as the global financial crisis was unfolding – and had to decide early on whether or not to press ahead.  But Trusts and Foundations have the benefit of the long view, and we were confident that in time the market would pick up and we would be able to provide a return on investment.


Initially we hoped to raise most of the investment through equity. However, in an uncertain climate most investors preferred the security of a loan rather than the higher risk equity investment.  So we ended up with a more complex combination of loans and equity than we really wanted.  Because raising the funds was more complex than we thought it would be, we had to renegotiate ‘heads of terms’ with our primary  lenders at a late stage – a difficult process for all sides.  One lender withdrew, but others stepped in to fill the gap and allow the building work to get under way.  The complexity of the financial arrangements and the need to meet the differing due diligence requirements of different primary lenders was costly both in time and money;  it would be good  to see more convergence so that less precious social investment funding is spent on legal fees and more is available for delivery of the mission.




And we had to be bold. Finding a suitable building was challenging.  Our initial preference was for an area in East London, but prices were rising rapidly and were a little out of our reach. We widened our search and found a building while we were still some way off our funding target.  A decision had to be made whether to buy, and risk not being able to raise development funds, or continue fundraising and risk losing out in a price bubble.  At the same time we had to assess the risks of not being able to find enough tenants to fill the building. Fortunately market research indicated that there would be sufficient demand for space, and, as it turned  out, by the  time we opened, almost all space had been filled.




So what could we pass on from our experience to anyone thinking of embarking on a similar project?

  • Make sure you have a strong partnership, with a shared vision and values and effective leadership from the Board
  • Choose your delivery partners carefully. Ensure they share the vision and understand what the project is trying to achieve
  • Carry out market research at an early stage to ensure the proposition is viable and will provide both sufficient financial return on investment and a clear social mission
  • Ensure you understand the ‘risk appetite’ and return requirements of investors
  • Develop a good performance framework to enable reporting on the extent to which the project delivers its social mission.
  • Have flexibility in putting together the funding package, but be prepared to turn down offers if the required returns are too high
  • Maintain your vision throughout the development stages
  • Be prepared to take measured risks


  • Celebrate your successes as you go along.


This blog was originally published by The Alliance magazine:

Debbie Pippard chaired The Foundry project and is Head of Programmes at Barrow Cadbury Trust.