Issue - meetings

 

Appendix B to the report relates to information which following a public interest test the public is likely to be excluded by virtue of paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972 ie. Information relating to the financial or business affairs of any particular person (including the authority holding that information).

Matter for Decision

 

This report presents the case for the Council to support the establishment of Greater Cambridge Social Impact Investment Fund (working title; referred to as ‘the Fund’), an independent social impact investment fund to help address inequality in line with the Council’s “One Cambridge Fair for All” vision. The Fund will do this by investing in opportunities to improve the lives of our most vulnerable communities and achieving measurable improvements in homelessness & rough sleeping, social mobility, youth employment, and health and wellbeing.

 

Options for the Fund’s purpose and structure were considered in a feasibility study, drawing on the experience of other places, and by co-designing the proposed model with social impact experts, local charities and social enterprises, potential social investors, and philanthropists.

 

A Fund Development Board is now in place. It has the appropriate expertise and experience to support the development and establishment of the Fund, including advising on the appropriate legal and governance arrangements. An initial investment of £0.2m is requested from the General Fund reserve to provide the necessary resources to develop the Fund and to fundraise.

 

In principle approval is also sought for a further £0.8m, bringing the Council’s potential investment in the Fund’s development and financing to £1m. A £0.8m contribution should only be made on condition sufficient progress has been made to secure funding from other sources, in line with the ambition to establish a £6-15m social impact fund.

 

Progress on the development and fundraising for the Fund will be reported to the Executive Cllr for Finance and Resources by the Fund Development Board and will be brought back to the Strategy & Resources Committee to provide updates at key stages and in advance of any key decisions.

 

Decision of the Executive Councillor for Finance & Resources:

 

To recommend to Full Council:

      i.         The allocation of £200,000 development funding to support the establishment of Greater Cambridge Social Impact Investment Fund (‘the Fund’) and enable fundraising over the next year.

    ii.         To agree ‘in principle’ a further £800,000 contribution to the Fund once it is established, subject to progress made to secure funding commitments of £5m from other parties, and that officers will provide advice in relation to this decision at a later date.

   iii.         To note that i) and ii) are one-off financial contributions from Reserves with the objective of leaving a lasting legacy from additional business rates collected due to the growth of the Cambridge economy.

  iv.         To note that activity to establish the Fund will be overseen by a Fund Development Board; that the £200,000 development funding will be managed by the Economic Development Manager, Cambridge City Council in line with council policies; and that progress will be reported by the Fund Development Board on a regular basis to the Executive Cllr for Finance and Resources and will be brought back to the Strategy & Resources Committee to provide updates at key stages over the next year.

Reason for the Decision

 

As set out in the Officer’s report.

 

Any Alternative Options Considered and Rejected

 

Not applicable.

 

Scrutiny Considerations

 

The Economic Development Manager introduced the report.

 

The Economic Development Manager and the Chief Executive said the following in response to Members’ questions:

 

i.               Working with Innovate Cambridge and Cambridge Innovation Capital about how the fund can provide a vehicle for tech investors to re-invest profits they make from the city.

ii.             Had discussions with Cambridge Ahead who had an Environmental Social Governance (ESG) group that had expressed support for the establishment of the fund. Including offers of pro-bono support around the fund itself.

iii.            The vision for the fund was to have a mix of different funders including institutional funders like Big Society Capital.

iv.           Not just about the public sector, it was about using public sector monies to leverage in opportunities that were not currently being taken advantage of.

v.             The role of Members is up for discussion and would be finalised and firmed up with the establishment of the fund.

vi.           Regarding the governance of the fund, part of the seed funding and the next phase of work would be to look at the legal structures and the governance of the fund itself.

vii.          Looking into various options and if the council agreed to be a full investor, it might expect to have a seat on the Board with other investors.

viii.        The pitch to funders was about the social return on investment they can gain through investment. There was also a financial return, however likely a smaller return than a commercial fund investment.

ix.           The funds vision was about putting investment into things that could provide ongoing returns on investment and become self-sustaining.

x.             There would be an investment committee to look at each instance on an individual basis. Would not wish to create a dependency from this fund.

xi.           The Board would be a development board. The actual governance of the fund would be something that needed to be worked out in the future.

xii.          This work had been taken as far as it could internally and now required someone to own it and lead conversations with corporates, philanthropists and other social investment funds.

xiii.        Had convened an investor discussion workshop and received positive responses. However, without more capacity and having someone who was a specialist to assist with developing the project, it was beyond Officers ability to get to the point to leverage in additional wealth from Cambridge.

xiv.        Large businesses in Cambridge recognised that unless they gave back to the local community in a visible and impactful way then their legitimacy was undermined. The Council’s role was pivotal in getting the project off the ground, giving it direction and giving it a set of directives. 

xv.         Funding would be needed for an Executive Director role. Initially they would most likely be employed by Cambridge City Council until the fund was off the ground.

xvi.        The fund would be an independent body/separate legal entity. Employees would be employed by the fund and not the Council.

xvii.      Board members would be giving their time on a pro-bono basis.

xviii.     Antony Ross OBE who lives in Cambridge is a renowned social investor for Bridges and was providing his time pro-bono to assist.

xix.        In response to advice from a Member that it may be more advantageous to register as a Community Interest Company or Charitable Incorporate Organisation rather that a company limited by guarantee the Economic Development Manager advised that she would take advice on board and make enquiries.

xx.         Had done a lot of research, spoken to social sector organisations and potential investors. There was demand for this project. Reputational risk was being managed by engagement with stakeholders and social sector organisations. As part of the governance arrangements there would be due diligence processes around the approval of projects.

xxi.        There were risks involved however Officers were gaining evidence to ensure that the project was successful.

xxii.      If everything went well would be in a position to start investing at the start of the 2024-25 financial year. The commitment was in the report, and Officers would bring back updates to Committee about timings regarding the Council’s goals.

xxiii.     The Board was keen to develop a relationship with Members and would return to Committee with updates regularly. Would invite Executive Councillor for Finance and Resources to an upcoming meeting.

xxiv.    The initial £200,000 investment would provide capacity to develop the project.

xxv.      One of the biggest gifts the Council could give would be a capital investment.

xxvi.    Would come back to S&R Scrutiny Committee, timeframe would need to be discussed, perhaps in the Autumn. Private briefings were also a possibility.

xxvii.   Have had two all member briefings already about the project. The determination of the governance, legal structure, regulatory implications, and subsidy regime needed to be worked on still.

The Committee unanimously endorsed the recommendations.

 

The Executive Councillor approved the recommendations.

 

 

Conflicts of Interest Declared by the Executive Councillor (and any Dispensations Granted)

 

No conflicts of interest were declared by the Executive Councillor.