Richard Nicol, Chief Executive of Midlands Together CIC, blogs about its successful social investment property development project which is training ex-offenders in construction skills*
From the moment I found out about the opportunity to become the CEO of Midlands Together CIC I was hooked. The ‘idea’, already pioneered in Bristol, had an attractive simplicity to it and I quickly found myself referring to it as ‘a flash of the blindingly obvious’. The model is simple. We buy empty and sub-standard homes and work with social enterprise partners to engage ex-offenders to repair, refurbish and restore these properties, which are then sold. The original capital, plus any profit, is re-invested back into the business to finance more property purchases and further job creation. What’s not to like about running a commercially profitable property development operation with the intention of having a positive impact on the lives of a disadvantaged workforce, using the profits they help to make to invest in the support and mentoring we know they are going to need, given where some of our employees are starting from.
To a social entrepreneur like me, who comes from a commercial property background, this was the ideal opportunity to demonstrate ‘it is easier to socialise the commercial than commercialise the social’. Often organisations delivering great social impact have to rely on their staff, many of whom may be volunteers, going the extra mile, to get their outcomes. Charging a vulnerable or disadvantaged client for a service they know is desperately needed would not come easily to such people. If, on the other hand, funding the key activities that really make a difference can be seen as ‘investment’, it will attract the attention of people who are accustomed to creating value.
Once selected for the role, I worked with Triodos Bank to shape the business plan for the Midlands operation. In Bristol the idea had initially been backed by a small group of sophisticated private investors, but to achieve the scale of investment required to finance a regional model, the offer needed a wider audience. Triodos’ Corporate Finance Team brought the social investors to the table including some significant new players and I was able to pitch the opportunity face to face. The investment opportunity was also promoted in the financial press and amongst their socially aware depositors. The result was that the £3m offer was oversubscribed and we closed the bond 100 days after the launch. Midlands Together was able to hit the ground running with a size and scale not often seen in the world of social enterprise start-ups. The Bond has a five year life which means we have time to make a real difference and build a sustainable business with a track record that could take us into the mainstream.
The capital enables us to create jobs, bring empty properties back into use and facilitate the employment of people who have been in prison. Offenders often leave prison with no permanent address, a history of substance abuse, literacy challenges and limited employment histories, all of which present huge challenges for living a crime-free life. A staggering 58% of short sentence adult offenders re-offend within 12 months of release.
We are working on four projects with three partner social enterprises currently on site. We have created 16 new jobs, will be creating 30 new homes once our current schemes are complete and none of our employees have re-offended. Over the five-year life of the Bond, we will have trained 100-150 ex-offenders and prepared them for a career in the construction industry. Our investors are receiving a healthy financial return, while base rates remain low, and have the added benefit of knowing their funds are financing measurable social impact and great social value. When the Bond matures in October 2018 we shall repay their funds and they can look for their next opportunity to back a “good” business idea.
* This blog was originally published by Big Society Capital.