Youth organisations unprepared for social investment, finds study

A study published by the Young Foundation found that despite youth organisations believing they could partner with investors to generate social and financial returns, in reality even successful organisations were unprepared.

The findings stem from the foundation's work as part of the Department for Education-backed Catalyst consortium that worked with more than 350 youth organisations over an 18-month period to prepare them for seeking social investment.

However, the foundation found that many of the youth groups could not describe how much money they needed and were also poor at planning how the investment would be used and repaid to the investor.

In its report, the foundation recommended that youth organisations spend more time developing in-house expertise to ensure they could maintain stable income schemes that would be attractive to investors.
 
It also said the youth sector’s needs were not wholly matched to those of social investment, as this is focused on development capital to support organisations to grow.

It identified that the youth sector mainly sought funding to enable organisations to shift from grant-based to revenue-based models.
 
Alex Stutz, head of policy at the National Youth Association (NYA), said the findings were unsurprising.
 
“The youth sector has faced significant financial challenges and uncertainly in the past few years and, as such, organisations are already stretched in ensuring that they can continue to deliver services with diminished budgets,” he said.
 
“While social investment certainly is one option in raising resource, it would appear from this research that the sector is some way from achieving this. At the heart of any programme must be effective commissioning processes.”
 
The Young Foundation’s report acknowledged that the youth sector was “undergoing a major shift”.

It recommended commissioners involve youth sector organisations in consultation processes for prospective commissioning changes, “so that they can effectively plan and adapt to change”.
 
Gemma Rocyn Jones, programme lead at the Young Foundation and author of the report, said: “There is real potential for social finance to help youth sector organisations increase their impact and sustainability.
 
“Unfortunately this does not fill the gap that funding changes have created and a large part of the sector needs deep capacity building to become both investment and contract ready.”

The Catalyst consortium was formed of the Young Foundation, NYA, the National Council for Voluntary Youth Services and Social Enterprise UK.