DCMS Consultation

The following is taken from the DCMS Sports Strategy consultation. We know they are keen to explore the potential for Social Investment in sport. Can you help us make the case? Can you highlight your appetite for investment and what you believe this can achieve?

We need great case studies and then we hope to carry out a proper feasibility into the demand.


New Investment Models

As well as new sources of funding outside the public sector, there are also new and innovative ways of investing public money to ensure the best possible return for the taxpayer. Many investments in sport, particularly capital investments in infrastructure and facilities have the potential to generate a financial return. While commercial investors will have their investment paid back from this financial return, it is very rare that public sector funders seek a portion of this financial return. Part of this is due to complex EU State Aid rules, but if they were able to do so it could help in three ways: f irstly they could offer very competitive rates; secondly they could offer loans to those who may not otherwise qualify; and thirdly they could then recycle the returns from those investments into new projects, effectively using the same money many times over to benefit many different projects. It may also be possible for public funders to take long term equity stakes in sporting organisations, projects and start-ups to help get them off the ground but also share in their success. All such spending would need to be in accordance with Treasury principles for Managing Public Money, including offering value for money for the taxpayer. Social investors are people who invest their money to have a measurable social impact, alongside a financial return. The UK now has the most developed social investment market in the world, with over £1bn private capital seeking social impact, and a large range of organisations connecting investors to socially minded organisations. Increasingly, charities and social enterprises are tapping into this market. Benefits for them in these include access to new sources of finance and business support from specialist lenders; and the ability to grow sustainably. Benefits for public sector organisations using social investment models include the ability to leverage in private investment and expertise using public sector funding towards particular social outcomes; and to test new ways to deliver services. Sources of social investment include specialist investment intermediaries, community shares, charity bonds, social impact bonds, and blended capital funds. There is now a Social Investment Tax Relief for these types of investment.
The Government has also piloted a number of targeted grant programmes to help organisations to build their capacity to take on social investment, through the Cabinet Office Investment Readiness programme. One example of a sport organisation benefitting from this type of finance is FC United of Manchester, the community owned football club which has raised nearly £2m through community shares and the Social Investment Tax Relief to build its own football ground. Another is Street League, which has raised over £600,000 plus business support from a social investment organisation, to expand its programmes that use football to support unemployed young people from the most disadvantaged backgrounds.
Government would welcome views on:

(i) the applicability of new investment options to the sports sector;

(ii) the appetite for such investments; and

(iii) the barriers to rolling them out.

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