Today, Kindred announced its first round of investment – it’s aiming to invest almost £1million (£950,500) to community businesses and STOs. The businesses receiving investment provide services as diverse as bike-based last mile delivery, aquaponic salad growing, forest schools, training for young people and refugees, community-based brewing and cycle lessons for marginalised communities.
However, what these organisations have in common is that they create huge social value, but struggle to attract ‘conventional’ investment. Kindred, which is funded by Liverpool City Region Combined Authority and Power to Change, steps in. It lends money to STOs, allowing them to grow, develop and repay the interest-free investment, which is then reinvested in the next generation of local STOs.
The investment is exceptionally flexible. A percentage of the investment can also be repaid in social repayments, by calculating the social value of each organisation’s work. But Kindred investees must also collaborate with each other, rather than compete, as its wider aim is to create a fairer local economy.
Some of the organisations receiving investment include:
- Grow Wellbeing, aiming to build confidence and resilience in nature through a programme of forest schools, horticulturalists, educators, artists and nature therapists
- SHOP – a new approach to adult social care, helping older people strengthen their independence at home, following a hospital stay or illness.
- Cycle of Life, removing barriers to active transport by delivering community cycle rides, repair workshops and maintenance training with a focus on marginalised communities.
- Future Yard, using music to create a cultural ecosystem and opportunities for young people, and becoming the UK’s first carbon-neutral grassroots music venue.
- Beautiful New Beginnings, supporting parents to become the primary educators in their child’s life, with a blended business model helping families across the globe.
- Café Laziz, a pioneering pop-up café in St Helens, building skills and confidence for refugees and asylum seekers
CEO at Power to Change, Vidhya Alakeson, believes the Kindred model could have a wider impact beyond Liverpool.
“This pioneering new investment community is kick starting a revolutionary approach to growing businesses that delivers both social and economic impact. It’s a new model with significant potential to be replicated across the country to build more inclusive economies post-Covid.”
The full impact of Kindred is yet to be seen, however a new report from the Heseltine Institute at the University of Liverpool offers a benchmark against which to measure its success. It outlines the financial position of the community business market in the region, pre-Covid and builds on the catalytic 2019 report which revealed the strength of the market in the region.
- 114 community businesses operating across the Liverpool City Region in early 2020 collectively earning £19 million of income, employing 500 staff, owning £27 million of fixed assets, and holding net assets worth £22 million.
- Community businesses in the region were much less likely to fail and had higher five-year survival rates than regional and national averages for all enterprises, but rates of new start-ups were lower.
- Over half of all community businesses in the region are in the 10 per cent most deprived areas in England. Three-quarters are in the 30 per cent most deprived areas.
- Community hubs are the largest sector, accounting for 29 per cent of the total.
- Many community businesses were operating with deficits in the period prior to the Covid-19 crisis and, as a result, unable to build reserves.
- In overall terms, the region’s community business market holds around one and a half month’s income as free reserves.
- In addition to financial sustainability, other factors for community business success included community engagement, the roles and skills of staff and volunteers, strong partnerships and local networks.
The analysis demonstrates the resilience of community businesses and the potential for them to have a positive social impact in the most economically deprived areas. However it also reinforces that community businesses are often operating on tight margins. Alongside their limited access to traditional investment, this means that access to money on flexible and favourable terms, such as the investment offered by Kindred, can play a key role in their growth.
Find out more about Kindred and the Liverpool City Region community business financial analysis.