By Sam Collin
Last year we launched a new tool to demonstrate the economic impact of CDFIs. It revealed that lending to enterprises alone contributed an additional £500m to UK GDP. By helping people move from unemployment into self-employment, supporting new and growing businesses and creating jobs CDFIs are a significant force in economic growth.
And they’re doing a whole lot more. We know that CDFIs are also having a major social impact. They are helping families struggling with problem debt, supporting would-be entrepreneurs achieve their business ambitions and enabling social enterprises to tackle some of society’s toughest challenges.
The CDFA is just about to launch a new tool, providing a dynamic framework for CDFIs to comprehensively, consistently and clearly report on their social impact. By mapping the value of community finance to all its stakeholders, we can build a strong compelling case for future investment and support – vital for the sector’s future success.
The social value framework enables CDFIs to tell, evidence and report on their social value in a transparent way. CDFIs are diverse in their nature, but consistent in the benefits they create for their stakeholder communities. We’ll now be able to demonstrate the value of CDFIs as a cornerstone of the financial services industry.
So how do we know what impact CDFIs are having on their stakeholders?
We have developed the framework to ensure effective reporting of social value. This involves a process that:
Considers the perspectives of people and groups important to an organisation
Is inclusive of all activities of an organisation
Enables comparison with other organisations addressing similar issues
Is subject to external scrutiny
Is communicated to others both within and without the organisation
The first step is to identify our stakeholder communities. In the case of community finance they are many and varied: from clients through funders, investors and intermediaries to staff, board and members.
The framework articulates the social value that community finance generates for these groups, and provides indicators to evidence this.
So soon we will know, for example he extent to which CDFIs are
- Enabling businesses and social entrepreneurs to access finance they couldn’t get elsewhere, improved their business skills, achieve their business ambitions, and keep their enterprise afloat or achieved growth.
- Enabling individuals to access fairer, more affordable borrowing, steer clear of payday lenders in future, take more control of their lives, reduce the burden of debt and make their homes safe and secure.
- enabling funders to achieve their goals through… making it easier to set up or grow a business, supporting economic opportunity for all, making it easier for social enterprises to access finance and grow, supporting long term solutions to difficult social problems, enabling communities to invest financially in themselves, building stronger, more cohesive and inclusive communities, helping to tackle worklessness and improving social justice.
- That is a lot of value added, and a lot of bold claims. As we roll out the social value framework and it is embraced by members we’ll soon have a myriad of reports that illustrate the framework with statistics, surveys and case studies. Combined with our economic impact tool, it will truly paint a full and rich picture of the impacts and value that CDFIs are creating.
Social Value: A reporting framework for community finance has been kindly supported by the Citi Foundation and developed by Dr Nick Henry of Coventry University. It will be released next month.