We’ve all heard of Comic Relief, the major UK charity fighting for a world free from poverty. Through a busy calendar of events, Comic Relief has been fundraising to support organisations around the world since the 1980s. Interestingly, in recent years, Comic Relief has formed a social investment fund called ‘Red Shed’ through its own money. This new fund aims to further the impact of its work through new funding structures.

Red Shed is looking at ways repayable finance can support Comic Relief’s social change strategy and how the foundation can learn about new approaches to tackle social issues. Amir Rizwan is the Senior Advisor for Social Investment & Social Innovation at Comic Relief, responsible for leading on their social investment strategy through Red Shed. To date, Red Shed has invested into a range of organisations – you can read about one of them here.

At Good Finance, we’re delighted to launch their new report into social investment. In this blog, Amir shares an introduction to Red Shed’s research and considerations so far.

Image of Comic Relief, Red Shed

Over recent years, small charities in the UK have had to face multiple challenges as a result of Government austerity, growing demand for their services, and an increasingly challenging funding environment. This perfect storm is putting greater pressure on smaller charities to find new ways to finance their work. A solution often touted in response to this, is the potential role that social investment can play in helping smaller charities to better navigate through difficult times. 

    Receiving social investment takes much longer than you think and should not be considered as last-minute or emergency funding.

To date, most of the literature and research on social investment has looked at the supply side of the investment (through the perspective of investors) which we found to be surprising. Given the number of organisations that Comic Relief support through traditional grant funding programmes, we were keen to better understand what the perceptions of social investment are from small and medium-sized charities. 

To produce this research paper, we worked with Patrick Barker, an academic who was studying at Cass Business School. Patrick engaged 233 Comic Relief funded organisations (of which 121 were small charities) as a sample to conduct the study and carried out 16 in-depth interviews. Through this process, the research looked to address a number of questions, including: 

·         The level of awareness around social investment 

·         What organisations are looking for from funding in general 

·         What the appetite is for social investment vs. grant funding 

·         What barriers organisations face when looking to take on social investment 

The research highlighted a number of interesting findings, which we want to share in order to feed into the debate about the role social investment can play in better supporting the charity sector.

Some key findings from our research include: 

·         Many small charities have a limited understanding of how social investment works – only 14% of respondents had any experience in taking on social investment, with smaller charities expressing a number of barriers to taking on social investment linked to their understanding and the appropriate products at the right price. Good Finance continues to develop tools to support charities and social enterprises with this. They are also working with infrastructure organisations across the UK to provide free regional events on social investment.

·         The long-term significance of social investment is unclear – many organisations were open to the idea of social investment; however, many questioned its relevance in the long-term.

·         There are uncertainties around the cost – there was a clear division in the issue of pricing between charities and investors, which may illustrate a lack of engagement or understanding between investors and small charities. 

·         Small charities may be concerned about the risk factor – a recurring theme of the findings and interviews was around the perceived risk of small charities taking on such financing, with the most common concern noted as ‘lack of confidence’. 

    While there is a large increase in interest in social investment across the UK, it is not and will not be appropriate for all charities and social enterprises. In fact, it may only ever be appropriate for a small percentage of organisations. Good Finance and the sector more widely are actively working to improve the understanding and trust of social investment among small charities. Social investment may also cost more than mainstream lending. Read about some reasons
why here.

So, what does this all mean for Comic Relief and the work that we are doing on social investment?

Whilst this is a snapshot of opinion, there are some clear indications around how social investment can be made more relevant to a wider range of small charities. As a new player in this space, the research has pointed us to now consider three key areas:

1.     Information – we want to look at how we can we improve the way we work with funded organisations to help them better understand different financing tools, develop the confidence to use them

2.    Relevance – we want to create and develop financing tools that respond to needs 

3.   Capacity building – we want to better understand the support charities need when going down this road 

The starting point for all of this is to listen and learn (something that can be expanded to the entire social investment sector) in order to build approaches and investment products that work for smaller charities.

We hope our report provides useful data and information to support the continued development of the social investment market, and that it can contribute in some way to helping ensure it becomes an accessible tool for the whole social sector. Read the full report here.

For more information on Comic Relief’s investment activities please contact Amir via email or on Twitter.

To find out if social investment could work for your charity or social enterprise, use Good Finance’s free online diagnostic tool and subscribe to their newsletter.


Do also visit GET INFORMED: Social investment for boards for practical support and guidance on social investment including a free mentor to help you build confidence and skills on social investment.