Michael Schluter: social impact and your money back
June 01, 2002
In a nutshell, how does the Boost Bond work?
The Boost Bond is a five-year, zero interest bond, with return of capital guaranteed by the Royal Bank of Canada Trust Corporation. Money pledged by companies and individuals will be used to invest in jobs, small businesses, housing regeneration and associated community facilities in the east London boroughs of Newham, Hackney and Tower Hamlets – three of the most disadvantaged urban areas in the UK, according to government statistics.
You can see the Bond as ‘charity plus’ or ‘business minus’ – that’s to say, as a very effective way of giving towards social investment, or as a low-yield, safe business investment.
Why exactly is the Bond so efficient?
Primarily, because you are guaranteed your money back after five years and then you can give it away again. The only ‘cost’ being the loss of interest. It’s also ‘clean money’, which means it’s eligible for matched grants from Europe and other funding bodies. As part of our pilot bond in Sheffield, for example, we made a grant of £50,000 to a seed corporation, which was then matched by a £120,000 European fund. On the back of this, HSBC agreed a guarantee fund of £600,000 for loans to the city’s long-term unemployed. That’s a serious multiplier effect at work!
How much do you aim to raise?
The Bond has a target of £50m. Agreed commitments and recommendations for investment currently stand at around £5m. Major investors already include London-based companies such as KPMG, Cazenove and Close Brothers. How do companies account for the investment? Corporate donors have treated their investment in different ways. Greggs, for example, which invested £500,000 in the Newcastle Bond, included it as a charitable grant from its foundation. Sage, on the other hand, put it on the balance sheet as part of its corporate investment.
What is really appealing about this form of social investment is the high profile that a relatively low ‘real’ investment reaps. Take a £1 million employment bond. It only costs the company £50,000 per year, yet it can cite the larger figure as its social investment. What the Americas mean by ‘getting a bang for your buck’, I think!
A social entrepreneur, researcher and campaigner, Dr Michael Schluter is chairman of Citylife, the charitable industrial and provident society behind the concept of employment bonds. After pioneering two bond schemes in Sheffield in 1999 and in Newcastle in 2001, Citylife is issuing the Boost Bond in east London.
The bond, which closes to new offerings on August 5, will work closely with local enterprises such as Tomorrow’s People and aims to help 6,000 unemployed people into work. In 1983, Michael founded the Jubilee Centre, a Christian research and campaigning organisation. Under this umbrella, he has launched a number of high profile initiatives, including the Keep Sunday Special Campaign. He is also founding director of the Relationships Foundation, a charity set up as a research and initiatives group in 1993 with the aim of building relationships in private and public life. Michael has also worked extensively in Africa, where he was a consultant with the World Bank in Tanzania and was co-ordinator of the Newick Park Initiative in South Africa. He is author of several books, including The R Factor (1993) and Credit and Debt, Sorting it out (1989). For more information on Boost, the City and East London Employment Bond, see www.boostlondon.org.uk
COMMENTS