As a young engineer Daniel Brewer was spotted by a leading philanthropist and set on a course to become one of the UK’s leading social impact figures, with a particular focus on helping social enterprises raise capital, and tackling homelessness
- CEO, Resonance, 2002-22
- Director, Pivot (UK poverty think tank), 2000-02
- MA, Manufacturing Engineering, Cambridge University, 1996-2000
“Resonance was set up in 2002 to mobilise values-led capital into the hands of social enterprises that could use it to scale their impact, and then return it for others to use,” states Daniel Brewer the CEO.
But the firm’s genesis is an interesting story. Having made a fortune creating Pipex, the UK’s first commercial internet service provider, entrepreneur Peter Dawe founded the Dawe Charitable Trust.
As part of this, he came across Brewer through an apprenticeship scheme Dawe was running at Cambridge University to spot bright, up-and-coming engineers. According to Brewer, Dawe had a penchant for young engineers because “they don’t stop until it works, and they are addicted to fixing things”.
“Peter backed me as apprentice entrepreneur to tackle the poverty trap by founding a think tank focused on UK poverty,” Brewer says.
Through this think tank, Brewer soon started to make waves, with the Guardian comparing him to the great British social reformer William Beveridge.
He says he “stumbled across purpose-led businesses that were calling themselves social enterprises, which were helping ordinary people to find ways around the system. That’s when I discovered combining passion and purpose. I had always feared capitalism was too much about money chasing money”.
From charity into impact
At the same time, according to Brewer, Dawe had “decided he wanted to move beyond charity into impact. He felt he was propping up a system of exploitation and feeding a culture of dependency.”
The two of them therefore came together and decided upon the idea of Resonance. “Taking capital that was already designed as seeking to be value-led and make it available to social businesses that needed growth capital.”
Resonance has created a fund of some £300m, with major investments from Big Society Capital, of around £50 million, and a series of UK local authorities who collectively have invested nearly half the funds.
It also attracts money from a lot of UK foundations such as the Esmée Fairbairn Foundation and the Guy’s & St. Thomas’s Foundation.
The firm is still partially owned by Dawe Charitable Trust and early backer charity Nesta, as well as by those who work in the business.
Today, Resonance works with social enterprises and charities, to help them raises the capital they need to grow their impact. In addition, it manages a number of social impact funds, focused on tackling pressing societal issues, with a particular expertise in homelessness, poverty, community-led projects, health and wellbeing, and education.
Brewer explains: “Resonance does two things. It continues what it first started with, that is venture lending to social businesses that need scale up capital. In addition, in recent years, we have concentrated far more on becoming an impact property fund manager, and this is now 90% of what we do.”
Resonance goes out and buys property which it then rents to charities who are specialising in the social housing sector.
Brewer says the venture lending part of the business remains important “as you can’t solve homelessness just by putting a roof over people’s heads. You need to look at the overall ecosystem which is leading people to homelessness”.
One example of this he gives is the importance of supporting low cost nursery provision, as well as other businesses which specialise in giving job opportunities to the long-term homeless.
Having said that, Brewer is keen to stress that Resonance “is very much not a charity, but an impact investor looking to give investors a return on their funds”. This is a combination of 3% cash yield plus a capital gain, which Brewer believes will give a total return of closer to 6%.
Resonance has achieved a lot. “We have created more than a thousand homes, housing over two and a half thousand people.” However Brewer says “homelessness remains a massive problem in the UK and one that is becoming significantly worse. It is costing hundreds of millions of pounds of local authority money”.
Brewer is particularly proud of the system that the firm has for distinguishing between potential housing partners. “We are excellent at that. Indeed I would say it has become our core skill set – finding people who really care, but who are also delivering social impact.”
“You can’t solve homelessness just by putting a roof over people’s heads. You need to look at the overall ecosystem which is leading people to homelessness.”Daniel Brewer
Resonance is working with Patron Capital Partners, helping to run the Women in Safe Homes Fund (WISH), which provides solutions to the lack of affordable and safe homes for women and children who are fleeing domestic violence.
In terms of finding venture lending partners, it relies heavily on its network system, but follows due diligence and appraisal processes through its investment committees. “It’s important that in everything we do we give our investors confidence.”
Resonance uses the impact report specialists the Curiosity Society to provide advice and quality assurance on its impact reports which Brewer believes are “gold standard”.
Challenges and the future
The biggest challenge for Brewer is simply scale. It is his ambition “to take the size of the fund for from 300 million pounds to £1 billion. The biggest factor in achieving scale will be cracking the UK pension fund market”. From this angle, he is “particularly pleased that the Greater Manchester Pension Fund has recently invested”.
Resonance currently has fifteen different housing partners and Brewer hopes for that number to increase.
Brewer also mentions the challenges resulting from the frequent changes in government policy. For example, he is frustrated that the UK government is withdrawing tax relief on social investments, which he describes as “a mistake”. And he worries about the growing cost of living crisis. “UK benefits are arising at only 3.8% against an inflationary backdrop rising at 7%, and energy inflation of 54%.”
Brewer is looking at ways to tackle energy poverty, including the installation of heat pumps in their properties and other technical solutions which will drive down Resonance’s carbon footprint and also improve the situation for tenants.
“Net zero is as an imperative we all need to respond to [to save the planet] but also because of the increasing costs of living that are being felt most acutely by low-income tenants,” he adds.
At the moment activities are concentrated in the UK only, but “we are constantly looking at whether we should be involved in the rest of Europe.”
Resonance is a member of the European Venture Philanthropy Association (EVPA) and Brewer says he is particularly interested in the work of the Austrian bank Erste and their pioneering housing solutions. “I intend to explore ways to collaborate internationally in the future.”