Funny Money. Peter Ramsden

Funny MoneyPeter Ramsden, Freiss Ltd , London UK and AEIDL

Laura Colini, PhD Tesserae gbr and IRS Leibniz research Institute, Berlin DE

Money makes the world go around: the old cofinancing model

Social investment: Supply, demand and intermediaries

Bandwidth of different funds

Urban regeneration fundsAlso known as JessicasSource: EU urban 50 cases Poznan, LGF London, Kredex Estonia

Emda Blueprint structure

Nottingham science park

Award winning scheme

Kredex housing loan jessica

Kredex achievements

Who benefits from Jessica, what type of results?• Succeeds in financing individual projects

(buildings) that are elements of a ‘physical’ integrated approach

• Usually only the revenue generating parts (science parks, workspaces, CHP systems, energy efficiency)

• Less able to finance public realm or disadvantaged neighbourhoods

• Revolving funds should be a more efficient way of spending ERDF

• Malmo social investment approach could be interesting

And some major downsides• Transparency: Cities and especially citizens

do not decide or sometimes even know which investments are selected

• These take a long time to set up 2 - 5 years• Accountability: managed at the regional level

by fund managers • The most revenue generating projects are

not always the most needed (e.g.end of pipe)• Heavy transaction costs for setting up and

running these funds (EIB, fund managers etc)

New PossibilitiesBut be careful what you wish for……

Source Ramsden 2013 New approaches to financing and delivering on long term unemployment OECD

Interesting developments in financing• Peer to peer and micro finance, diaspora

finance• Alternative currencies – time banks, air

miles, local exchange trading systems, plastic money, internet money

• Impact investing and exotic products like Social Impact Bonds

• Crowd funding• Challenges (Bloomberg challenge)

Crowd funding

• What is it?• Is it new? Mark Twain, Beethoven, Mozart

used crowd funding• How does it work? (Kickstarter etc)• How could cities use crowd funding?

Facts on kickstarter

• Kickstarter is a platform for funding independently created projects: films, games, music, art, design, and technology.

• Since their launch in 2009, 4.9 million people pledged $800 million, funding 49,000 creative projects.

• Creators and backers make projects happen together. • Funding on Kickstarter is all-or-nothing —44% of

projects have reached their funding goals.• Creators keep 100% ownership of their work.• Backing a project is more than just giving someone

money.• Kickstarter is a for profit company

Social Impact Bonds SIBS• A public private financial circuit• Bond holders get a return if they achieve target

social impacts• First example is the Peterborough Prison Bond• Recidivism on short term sentences is over 60% • Reduction by 7.5% to achieve return• ‘Through the door’ services delivered by two

social enterprises (St Giles and Ormiston)• £5million initial scale, now copied at Rikers Island

and others for homelessness

A Faustian pact?

How to judge whether finance will be good?• Is it transparent? Is it accountable? Do you

understand it? Will others?• Does it meet real human needs? what types

of projects does it deliver on the ground?• Who benefits and who loses?• How long will it take to set up? Can and should a city do this? (legally, morally,

practically, financially)

• Can it work with ERDF or ESF?

Thank you for your attention!

Peterramsden2@gmail.com