Kindred spirits align in Liverpool City Region to grow social businesses

“I trade with you, you trade with me; we build a community of trust and encourage others to join in,” explains Erika Rushton MBE of Kindred, a community owned business collective that invests in companies delivering social value across the Liverpool City Region.

Kindred currently has over 800 members who can secure loans to grow their social impact with the very favourable term of 0% interest to expand their businesses. “The fund is collectively owned by the membership, and around three quarters of the loans are returned,” says Erika, the group’s Strategy & Programme Director, who helped set up the community interest company nearly three years ago.

“But loans don’t have to be paid back only in money; a portion of the investment can be repaid through social return, in terms of the good that you create for the community.”

To date, Kindred has allocated £2 million to 44 businesses, and helped to more than double their collective turnover from around £1.5 million to more than £3 million. Staff headcount across the firms loaned money has also doubled.

Companies supported by the initiative must have a social enterprising or environmentally sustainable focus – and many are run by people from groups under-invested in by both commercial and social investors. Around 150 socially trading firms are already listed on a directory on the Kindred website.

Now the social investment model created for the Liverpool City Region is attracting interest from elsewhere in the UK with the support of Connected Places Catapult, which has worked with Kindred to create a Kindred Spirits toolkit for other urban areas to follow, add to and develop their own local, social economy, which is explained here.

Helping firms find finance

Erika explains that an initial group of 150 firms who started working with Kindred were keen to access business finance, but were wary of taking out bank loans, or social or mainstream investment. “Their experience of money often involved people trying to sell them debt they couldn’t afford to repay.”

Erika and her team were keen to overcome an issue of large firms consulting them – asking for details of a problem, coming up with a solution, and selling it back at a price that is probably unaffordable. “By creating a pooled resource of traders operating in a local region and bound together with a sense of trust, she adds, services are designed to be affordable or we would have no customers, and solutions are informed by our lived experience.

“As well as providing loans, we fund peer-to-peer support so that local companies with experience in one area can help others who need it,” she adds.

“For me, this is what good local economies should look like, and is something that existed for centuries. But the current economic model operating around the world is broken, as it allows some people to become very rich – and the rest of us not so much.”

The situation is unsustainable too, she adds. “Even some of the richest people now recognise that the current model won’t work forever, because the people they want to sell stuff to haven’t got enough money to buy it. They are putting some of their money back be that as philanthropists or social investors. Economies need buyers as well as sellers.”

Clusters of community growth

Erika says several pockets of the Liverpool City Region are being revived by socially trading organisations and enterprises with the support of Kindred. At Hamilton Square in the town of Birkenhead, a couple of businesses on one street featuring a parade of derelict shops received funding, which began to attract other start-up firms. Three years later, there are no empty shops.

Erika is proud of the many ventures that Kindred has funded, but picks out two to show the breadth of enterprises it supports. One venture is called Future Yard, a live music venue and studio on the Wirral that first organised band nights, then a festival and now attracts audiences from across the North West, alongside providing routes into the music industry for young people.

Another initiative is SHOP – Supporters Helping Older People – which provides cleaning and shopping services in and around Knowsley for elderly persons who need some support to live at home.

Both examples show a form of innovation in action, Erika adds. “Until recently, many people thought innovation was all about new technology or smartphone apps. But what we offer is social innovation. These things tend to start at a very small scale, and part of Kindred’s role is to find those gems and help them scale-up.”

“Good economics depends on having confidence,” says Erika, “so we encourage people with ideas to believe in themselves, demonstrate their ideas can work, and then grow them to positively impact more and more lives.”

Connected Places Catapult’s Business Director for Devolved Government, Alex Cousins said: “For me, Kindred is about uncovering and supporting those in the innovation economy who are doing great work for the social good; and producing growth from the bottom-up, rather than the top-down.