Readiness or resilience?

What is investment readiness? It’s a concept commonly found in the social entrepreneurship sector, but what does it mean? And does it do anything useful? Reading Social Investment Businesses’ (SIB) recent report Strength in Numbers, I was struck by the following passage:

‘[While] investment and contract readiness programmes have been a success we now believe it is time to retire the ‘investment readiness’ label. Although the work has been undeniably valuable, it is just one part of the picture.’

This conclusion, part of the reports review of 5 years of SIB programmes, should be heard. It is prompted by SIB’s belief that investment readiness programmes have focused on maximising growth in turnover, this has been a mistake, and they should instead support organisational resilience.

‘Many organisations do need help to take on investment. But framing support around raising investmentrather than the traits which may make it more likelyfocuses work in the wrong place. Instead, focusing on resilience will help more sector organisations be in the best place to improve people’s lives.

At NPC we have sympathy with this view. We have worked with a number of organisations as part of the Cabinet Office’s investment readiness programme—which followed a fairly traditional model of investment readiness support. We don’t know how many of the organisations funded through the programme subsequently took on investment, but expect it could have been higher had the type of support been broader.

Resilience is about more than money

But while we broadly agree, we would argue that what we mean by ‘resilience’ needn’t be too reductive. In their paper, SIB focus primarily on financial resilience—the ability to adapt quickly to changes in things like funding or demand, and how this affects turnover. Impact also has an important role to play in resilience, and social sector organisations know it. 72% of SIB’s support requests focus on impact, second only to financial modelling (which itself might only reflect what the SIB programme is intended to cover).

Ensuring interventions are evidence-based and delivered well, or having the tools to measure and understand impact where there is less existing evidence, helps organisations ensure outcomes are resilient to change—because it’s not just turnover that needs to be maintained when times get tough.

With a strong understanding of how impact is generated—for example with a well evidenced theory of change—organisations are in a better position to adapt services and be flexible if needed. It helps an organisation understand what’s key about a service and what could be cut.

Complementary resilience

Of course, impact resilience and financial resilience are not necessarily at odds and SIB’s report provides us with a good example of how they can support each other. Investors will want good evidence of impact if they’re being asked to finance work. Therefore resilience in mission driven organisations requires a solid grounding in impact management—not just as a ‘nice to have’, but as a core factor in achieving financial resilience.

And what next?

Strength in Numbers contains lots of interesting insights and ideas that could benefit this market. Some will require action (and money), for example, developing a platform to help potential investees navigate the complex landscape of intermediaries and investors. As for the question of investment readiness, I suspect the term will live on but hopefully this is start of a debate about what it should mean. As ever NPC will strive to put impact at the heart of it.




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