Resonance - Twenty Years Of Impact - Report - Page 50
2008
1.8M HOUSEHOLDS
in England are on housing waiting lists6
RESONANCE KEY MILESTONES
JOINT VENTURE
• Sponsored by the Cabinet Office, Resonance partners with a couple of
intermediaries as a joint venture called Equity Plus, to look at angel investing
KNOWLEDGE TRANSFER
• First ‘Good Deals’ Conference from Social Enterprise Magazine is held
at LSO St Luke’s. Daniel was one of the speakers. Karen Sorab from
BeyondAutism and Daniel meet for the first time.
PILOT DEAL
• COCHABAMBA: The learnings from this deal contributed to the
development of the Community Share Underwriting Fund that would
eventually be launched in 2012.
IN THE NEWS...
• Stock markets plunge and the great recession begins
• Barack Obama is elected to become the first black President of the
United States
• Cuban president Fidel Castro permanently steps down after 49 years
in power
Source:
6. GOV.UK - Live Table 600: Numbers of households on local authorities housing waiting lists by
district: 2021
50
2009
CALCULATIONS FOR ROUGH SLEEPING
FIGURES IN THE UK WERE CHANGED*
This changed the numbers considerably, so we
are reporting from this point onwards.
DANYAL SATTAR
BIG ISSUE INVEST
I’ve been around this space for a long time now –
coming onto three decades. I’d started out working
for a little think tank, as it was then, New Economics
Foundation. We were out there to change the economic
system and get more in line with the planet. That need
has not changed. After five years it was time to move
on and I followed people who were looking to move
money more directly to support the causes and changes
we sought. Tessa Tennant was chairing UK Sustainable Investment Forum and
Pat Conaty, setting up Aston Reinvestment Trust (ART).
How do you replicate it?
That was my first connection to Resonance, though I did not know it at the time.
As Steve Walker, Pat Conaty and many others were getting ART going, and I
was making my first loan assessments of my career, along came Bob Paterson.
Bob looked at what we were doing at ART and asked us what we were doing to
replicate it. We all probably looked a bit fraught at that prospect. We hadn’t even
got ART going yet at that point, and here was someone asking us about our
replication plans. Bob, irrepressibly, with all our support and good wishes, took
on the replication job, and rolled out a number of early replication community
development finance institutions. Bob also got the community land trust bug
from Pat, who brought the concept across from the States and promoted it. Bob
got on with replication and set up Community Land & Finance (CAF) as a vehicle
to take this forward.
Years on, Bob Paterson and Daniel Brewer merged their efforts, and put them
under Daniel’s organisation, Resonance. That is when I first really got into contact
with Daniel. By this time, I’d spent a bit of time working on the continent, and
back to work for Malcolm Hayday in the early days of CAF’s Investors in Society
which converted into Charity Bank. I moved across to a funder, Esmée Fairbairn
Foundation, and up popped Daniel Brewer and Resonance.
This was a classic financing solution
Daniel was on that journey – he’d raised some initial investment funding, to buy
property for people with learning disabilities, in a project called Mustard Seed
Property and was looking for a more coherent solution. Could a community
development financial institution (CDFI) or a Fund, be set up to do the job? Over
the years at Esmée, we were lucky enough to invest in a good few things Daniel
and Resonance came up with. While the big ones were the Real Lettings Property
Funds, which we backed, the one I liked the most I think, was the Community
Shares Underwriting Fund. It was a great idea. Community share issues are when
a local community forms a cooperative for the benefit of the community and
issues shares to fund a local project. It might be buying the local pub, or reviving a
long discussed weir into a micro-hydro scheme, or putting solar panels on school
roofs. Gradually, a pattern emerged. Get to 65%-75% of the say, £500,000 needed,
and you find the project almost always raises the full amount and is successful. It
just takes as much time to do the final quarter or third as it did the majority of the
funding. And in the meantime, the project cost may increase. This was a classic
financing solution – lend the money on slightly more expensive terms than the
share issue itself, to incentivise continued share raising, and allow the project
to go ahead now. Typically, that’s all that is needed to get the last few investors
over the line – the certainty that the project would actually happen. “It will never
happen – but if it does, I’ll put my money in” – and the Community Shares
Underwriting Fund solved that problem. A number of foundations, and then Big
Society Capital came in.
THE BANK OF ENGLAND
cuts its base interest rate to 1.5% amid the global economic
downturn, the lowest it has been in the bank’s 300-year history
“Daniel Brewer Clauses”
It was around that time that Resonance was developing the Real Lettings
Property fund concept and another key person in our sector had an influence,
Stephen Lloyd. He was at that time, managing partner at Bates Wells (Bates
Wells Braithwaite as it was at that time). I was looking at the Community Share
Underwriting Fund, and I ran it past Bates Wells for legal advice. Set up something
called “fund” and attract multiple investors and make multiple investments and
well, it’s either the FCA or the PRA as a regulator and better make sure it is one or
the other! So time for a bit of legal advice, I thought. I was somewhat surprised
on the call, when Simon Steeden, our lawyer at Bates Wells, said “Just a moment,
Danyal, I’m going to get our managing partner on the line,” and Stephen joined
us. Stephen was such an influential figure on the development of the legal
structures that support social enterprise today. I’d known him over the years,
and expected nothing but kind words for Resonance’s new initiative. I got the
hairdryer from Stephen – “They cannot raise money with a document like this”
he thundered down the phone at me. Thanks to his intervention, as funders we
worked with Resonance to make sure their documentation was just as good as
anyone from the commercial world. One of the many ways Stephen Lloyd helped
many of us in our sector over the years, albeit at the forceful end this time! Simon
Chisholm joining Daniel Brewer was a big part of that transition.
And on the legal side, it was Resonance that led to what I called the “Daniel Brewer
Clauses.” Daniel and I were running through some legal documents, and as is
common, there was a key person clause. “I’m not going anywhere” was Daniel’s
view, “Why do we need this clause?” “Well, it is there so we can have a say over
your replacement, if and when that’s necessary.” “Why can’t I have that over you,”
was Daniel’s instant response. “If people are important, then who is on the other
end of the investment from my perspective, is just as important as I am to you.”
Good point, I thought. We ask a lot of our investees. Not just a key person clause,
but management information, accounts, impact reports, meetings. It goes on. It is
a bit one way. Could we not make it more equitable?
I asked our lawyers at the time, who perhaps predictably, shuddered. “What if
you forget to send something to them – you’d be in breach of your investment
agreement.” That was rather the point, I thought, but a firm of lawyers advising
us, was not going to do something so obviously in favour of the party who in
commercial terms was the ‘other side.’ In the end, I stuck these things in the
offer letter – that the investee would receive a copy of our annual report and
accounts, that we’d send them an impact report on how our impact portfolio was
doing overall. That they had the right to speak to me, and on request, our Finance
Director. That they could ask to speak to our CEO (at that time that was not me),
and they could request to speak to a Trustee (but I could not guarantee that).
I cannot say that kind of offer letter endured past my tenure in that investment
role, but it’s the kind of thing we ought to be doing. It feels more equitable. And
that is what we should be practicing. Practice it enough times, and it becomes the
new normal. And perhaps, in another twenty years, we won’t be having to invest
in a new Resonance, or Big Issue Invest, or any other of the organisations we’ve
had to set up and run, to put money to a better purpose.
THE INTERNATIONAL MONETARY FUND
projects that the UK economy will shrink by 2.8% in the
forthcoming year, the biggest drop in any advanced nation
RESONANCE KEY MILESTONES
PEOPLE
• First full-time employee, in addition to Daniel, joins Resonance
MERGER
• Bob Paterson’s organisation merged with Resonance and Bob joined the
Resonance board. Bob working on the design of the Affordable Homes
Rental Fund based on his experience.
INNOVATIVE
• Daniel working on the design of the Community Share Underwriting Fund
based on his experience of the purchase of Mustard Seed Property and a
couple of his earlier deals where he introduced an investor to get a deal over
the line.
PILOT DEAL
• RED BRICK BUILDING: The learnings from this deal contributed to the
development of the Community Share Underwriting Fund that would
eventually be launched in 2012.
IN THE NEWS...
• The internet is introduced to Bitcoin
• The G-20 London summit is held in response to the ongoing
global financial crisis
• Sweden follows the Netherlands, Norway, Belgium and Spain to become
the fifth European country to legalise same-sex marriage
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