Growing sustainably: increasing revenue and social impact

- how a charitable social enterprise is achieving its ambitious growth plans

Introductions

• Tim Willis• Chair of Trustees of London Early Years Foundation

• Neil Fenton• LEYF Director of Finance and Social Investment

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LEYF’s social mission is to provide high

quality childcare to children from

disadvantaged boroughs across

London

Social Mission

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An organisation where the child is at the centre

We run 26 community nurseries in 7 London Boroughs

We are in areas of high economic disadvantage

We provide high quality, accessible childcare

We actively engage with parents and the communities

We have a multi-generational, whole family approach

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• In the last 5 years LEYF has transformed its business

• In 2012 LEYF won the O2 National Business Transformation Award for its change programme

• Over the last few years, LEYF’s performance has been exceptional in key metrics

• LEYF secured funding to develop its core and grow the business

• LEYF aims to increase its social impact and reach at least 5,000 children, their families and communities by 2017

• MBE for CEO

LEYF has become the leading childcare social enterprise in London

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Growth, 2008 to 2014

Number of children

Nursery revenue (£000)

12% CAGR (06-14)

19% CAGR (06-14)

CAGR = Compound Annual Growth Rate

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# LEYF staff 85 130 140 163 189 216 261 286 310 328

# LEYF nurseries 11 13 13 15 18 19 20 23 24 25

13%18%

14%17%

25%

29%

13%

Future ambitions

• Strategic objectives are growth, financial sustainability, excellence in childcare and high quality staff

• Grow to 56 settings by 2017• Maintain a balance of nurseries

from “disadvantaged” to full fee-paying

• Maintain the model that adds social value through more than just childcare for the disadvantaged

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Strategic challenges - governance

• Having the right board of trustees

• Creating space for truly strategic discussions

• Being flexible about decision-making processes

• Dealing with disagreements, concerns between trustees and exec/non-execs

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Strategic challenges - risk

• Not losing sight of social mission and/or charitable objects

• Custodianship of a 110 year old charity

• Safety of children• Stewardship of finances• Reputation

... Yet ambitious, commercial and risk-taking

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Strategic challenges - resources

New business

Discussing growth ideas

Seeking investment

Exploring, investigating and negotiating the new business pipeline

Integrating new acquisitions

Business as usual

Maintaining workforce morale

Maximising occupancy

Maintaining quality

Ofsted inspectionsGovernment policy Parent & community engagementGovernment policy

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Social Enterprise Model

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LEYF’s social enterprise business model supports its mission to maximise social

impact, whilst remaining financially sustainable

and maximises social impact

Full fee paying nurseries

Balanced nurseries(mix of fee paying and free/ low cost

places)

Disadvantaged (free/ low fee

places) nurseries

x y z

LEYF social enterprise business model

Full

…nurseries in more disadvantaged

areas

Full fee paying nurseries in more affluent areas of

London support…

Our model delivers a sliding scale of social impact recorded across different types of settings

drives financial sustainability

(targeted split)

Full fee paying

Balanced Disadvantaged

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The extent to which LEYF fulfils its social mission is measured by the social impact delivered through its nurseries

To assess the social impact delivered through its nurseries, LEYF developed a measure that focuses on key drivers of childcare that directly benefit the child:

The social impact delivered by LEYF is not limited to high quality childcare provision as it includes increasing social mobility, reducing child poverty, supporting parents in returning to work, multigenerational engagement with communities, enhancing social cohesion and inclusion, local employment of nursery staff and apprenticeship programmes for NEETs

LEYF Social impact units

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Investing in Social Enterprise - Issues

•Lack of understanding in the investor community•Avenues of investment are limited and expensive•How do you determine the market value of an SE?•No market for trading equity •SE’s profits are reinvested into pursuing their social aims•How do you measure Social Impact?•Often limited securable assets•Governance

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Questions

• In a heavily regulated environment, if the best way to maintain and enhance quality is by an obsessive focus on business as usual, how can you find the time, energy and funding for significant growth, without compromising quality?

• How do you minimise risk to the charity and achieve ambitious commercial growth, funded by borrowing? Can the charity model cope?

• How does a charity with trustees, a constitution and board/committees best make quick decisions in a commercial environment?

• Is the comprehensive and universal measurement of social Impact the Holy Grail of charities and social enterprises?

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