Born out of a need to provide an alternative source of capital to the voluntary sector in the face of reduced grants, Community Finance Ireland (CFI) strives to empower communities to empower themselves, through the medium of community loans on terms and conditions appropriate to volunteer leadership teams. CFI is a registered charity that has lent €110 million to community groups and volunteers since its inception.
In an era where financial success is no longer the sole measure of an organisation's worth, in 2023 CFI embarked on a transformative journey to weave social impact into the fabric of our annual reporting. A collaboration with Rose Regeneration has not only given independent credibility to this reporting process but has also brought to light the significant multiplier effect our client investments are having on communities across the island of Ireland. The most recent results from our 2023 activity underscore the success of social finance, with a high recorded social impact value, highlighting the far-reaching benefits of CFI’s involvement with a diverse range of volunteer led bodies north and south.
The Need for Social Impact Reporting
As a community lender, CFI has always been driven by a mission to support and show the wider impact of social enterprises, charities and community groups that make a tangible difference in their local areas (and in some instances even regionally and nationally). However, measuring the true impact of this investment has often been challenging.
Traditional financial reporting metrics fail to capture the full value of these investments, particularly the broader social, economic and environmental benefits that ripple through communities. Recognising this gap, we sought to embed a robust social impact reporting framework into our annual returns to better reflect the value created.
The Role of Rose Regeneration
Our search for a partner who could guide us through this complex process led us to Rose Regeneration, a UK-based consultancy with a strong track record in social impact assessment. With expertise in measuring and articulating the value of social investments, Rose Regeneration has proven a more than competent partner to help quantify and communicate the positive changes driven by our client investments.
Rose Regeneration brought a comprehensive approach to the project, combining rigorous data analysis with qualitative insights. They worked closely with our team to develop a methodology that would capture the multi-dimensional impact of the investments, considering factors such as social cohesion, economic development, and environmental sustainability. This approach ensured that the impact metrics were not just numbers on a page, but a reflection of the real-world benefits experienced by communities. Two reports have now been completed (2022 and 2023).
A 3.69:1 Social Impact Ratio in 2023
The culmination of this collaborative effort was our social impact report for 2023, which revealed a compelling social impact ratio of 3.69:1. This ratio means that for every £/€1 invested by CFI, £/€3.69 worth of social value was generated in the communities we serve. This is a great achievement, demonstrating the effectiveness of CFI’s investments and the substantial positive impact they have on people's lives.
The 3.69:1 ratio is not just a number; it represents countless stories of community transformation. From job creation and skills development to improved mental health and social inclusion, CFI's community loans create a ripple effect that extends far beyond the initial funding. These outcomes are a testament to the power of social finance and the importance of embedding impact reporting into the heart of financial reporting.
Moving Forward: Lessons and Future Plans
The success of the 2023 report has set a new benchmark for CFI. It has shown that by rigorously measuring and reporting on social impact, organisations like ours, and as importantly potential investors, can gain a deeper understanding of their contributions and make more informed decisions about future investments. For CFI, this journey is far from over. We plan to continue refining our impact measurement framework, working with Rose Regeneration to explore new ways of capturing and communicating the value they create. The 2023 report developed on its predecessor by focusing on 12 months activity (2022: 41 months) and included our lending to private SMEs through the Northern Ireland Small Business Loan Fund among our activities (2022: exclusively on community lending).
Furthermore, CFI's commitment to quality, integrity and empathy has been strengthened by this process. By publicly sharing the impact reports, we are not only holding ourselves accountable to stakeholders but hopefully also inspiring others in the social finance sector to adopt similar practices.
Our 2023 report and highlights can be read here: https://communityfinanceireland.com/publication/community-finance-irelands-social-value-analysis-report-2023/
About the Author
Dónal Traynor is Group CEO of CFI and has over 25 years’ experience working with charities, social enterprises, SMEs and government influencers across the island of Ireland.
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