Social Innovation in the Community Asset Market
Lead Research Organisation:
University of Liverpool
Department Name: Management School
Abstract
The community asset 'market' causes problems to the three main stakeholders. First, an insufficient supply to meet the demand for space from social enterprise. Second, anchor institutions committed to asset transfer find the current process inefficient and high risk. This is because many social enterprises have what is regarded as a weak balance sheet history. For the same reason, social investors who are keen on seeking social impact from their investments, are concerned with the means of investing into individual social enterprises. We propose a solution to these problems.
We aim to broker asset transfer, significantly reducing the risk of transfer and investment. We will use detailed local knowledge to provide assets of an appropriate size and location, co-designed with social enterprises, ensuring development fits the resources available. The community asset holding company will generate revenue through rental income for assets and services needed by social enterprise, developed on the expertise of the partner Kindred-LCR. We assist the social enterprise in building its balance sheet and ensure the asset as security for future development.
Our 2017 research identified two areas that prevented growth in the social enterprise sector in Liverpool City Region. First was the adequate provision of appropriate social finance and second, was the supply of commercial and community space. This research was developed in 2019 and again in 2021 with further insights showing how growth and financial sustainability could be achieved amongst social enterprise. In 2023 we looked specifically at asset ownership and outlined a blueprint for successful community asset transfer.
Our research has shown that 53% of social enterprises are in communities defined as the most deprived, including the hardest to reach groups in migrant and BAME communities. We demonstrate that if £32m of assets were made available to city region social enterprises, from the £8bn worth held by anchor institutions in the city region, then up to £100m of extra income and 2,750 additional jobs could be created.
By holding the asset, the company will provide a more effective use of currently under-utilised assets, and commensurate generation of significant social impact. The company will negotiate a transfer of assets for below-market, and where possible nominal, values. The company will charge affordable rents (for the new space) to social enterprises and provide business services that closely match their needs. This will ensure rental income is stable and voids are minimised.
Demand for property from social enterprises provides a market to enable fixed costs to be spread across multiple properties, revenues to be generated from a range of different property types and tenures, and scope for significant economies of scale to be realised by the company. As a not-for-profit organisation, any surpluses will be reinvested for the benefit of LCR's social enterprises with no distribution of dividends to external shareholders. The company will operate sustainably, while investors providing loans to the company will achieve stable income from a sizeable asset-backed organisation and significant social impact.
We aim to broker asset transfer, significantly reducing the risk of transfer and investment. We will use detailed local knowledge to provide assets of an appropriate size and location, co-designed with social enterprises, ensuring development fits the resources available. The community asset holding company will generate revenue through rental income for assets and services needed by social enterprise, developed on the expertise of the partner Kindred-LCR. We assist the social enterprise in building its balance sheet and ensure the asset as security for future development.
Our 2017 research identified two areas that prevented growth in the social enterprise sector in Liverpool City Region. First was the adequate provision of appropriate social finance and second, was the supply of commercial and community space. This research was developed in 2019 and again in 2021 with further insights showing how growth and financial sustainability could be achieved amongst social enterprise. In 2023 we looked specifically at asset ownership and outlined a blueprint for successful community asset transfer.
Our research has shown that 53% of social enterprises are in communities defined as the most deprived, including the hardest to reach groups in migrant and BAME communities. We demonstrate that if £32m of assets were made available to city region social enterprises, from the £8bn worth held by anchor institutions in the city region, then up to £100m of extra income and 2,750 additional jobs could be created.
By holding the asset, the company will provide a more effective use of currently under-utilised assets, and commensurate generation of significant social impact. The company will negotiate a transfer of assets for below-market, and where possible nominal, values. The company will charge affordable rents (for the new space) to social enterprises and provide business services that closely match their needs. This will ensure rental income is stable and voids are minimised.
Demand for property from social enterprises provides a market to enable fixed costs to be spread across multiple properties, revenues to be generated from a range of different property types and tenures, and scope for significant economies of scale to be realised by the company. As a not-for-profit organisation, any surpluses will be reinvested for the benefit of LCR's social enterprises with no distribution of dividends to external shareholders. The company will operate sustainably, while investors providing loans to the company will achieve stable income from a sizeable asset-backed organisation and significant social impact.
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| Alan Southern (Principal Investigator) |