Last Friday, the Alternative Commission on Social Investment launched its recommendations into how we can improve the social investment market. Its foundation being that “while many individuals and organisations in the UK are successfully using finance to support social good, the idea of ‘social investment’ and the ‘social investment market’ are neither living up to the rhetoric of politicians and social investment leaders nor meeting the expectations of many charities and social enterprises.”
At 94 pages, the full report is quite full on. And with 50 recommendations, it offers quite a lot of work to be done.
I would highly recommend reading both the summary report and full version. But for those who don’t fancy ploughing through, to my mind here are the most interesting recommendations for social sector organisations (SSOs) – i.e. those that are delivering social impact at the frontline. These chosen either because they would make a significant difference to our understanding of the social investment market or the availability of funds, or because they require some input from ourselves (as SSOs) to come to fruition. SSOs – to work!
These are copied verbatim from the report with the headings given some further explanation by me.
TRANSPARENCY
Helping SSOs understand what is happening in the market and whether it might suit their needs:
1. Explain who Big Society Capital (BSC)-backed market is for – Be clear about how many social sector organisations can realistically expect to receive investment from the BSC backed market (assuming it works). If it’s 200, be honest about that (Politicians, Cabinet Office, Big Society Capital)
2 Publish details of investments made on your website – to enable Social Sector Organisations to understand that size and type of investments you make (SIFIs)
SOCIAL INVESTMENT IS DEAD!
Helping SSOs and the whole sector realise that, whilst useful, social investment isn’t the only the saviour we’ve been waiting for:
3. Minimise all forms of social investment hype that might inflate expectations and under no circumstances imply that social investment can fill gaps left by cuts in public spending (Cabinet Office, DWP, MoJ, HMT ministers and officials, Big Society Capital, Big Lottery Fund, NCVO, ACEVO, Social Enterprise UK)
LONG LIVE SOCIAL INVESTMENT
There are still a huge number of opportunities for social investment to help SSOs if it can overcome some key structural issues:
4. Employ more social entrepreneurs and others with social sector experience – take on more staff with direct, practical experience of using repayable finance to do social good and enable them to use that experience to inform investment decisions (Big Society Capital, SIFIs)
5. Focus on additionality and filling the gaps esp small, patient risky, equity-like – (Big Society Capital, Key Stakeholders, SIFIs)
6. Support the development of a distinctively social secondary market for social investments where early stage investors will be able to sell on investments to investors with similar social commitment but less appetite for risk (Cabinet Office, Big Society Capital, Access)
DOING IT OURSELVES
With a significant amount of capital in the market, especially on the balance sheets of larger funders and organisations, there is much that could be done by SSOs independently:
7. Create a ‘Compare the market’/’trip advisor’ tool for social investment – enabling organisations to rate their experiences and comment – (Umbrella bodies and SSOs)
8. Back yourselves and invest in each other – Social sector organisations should consider cutting out the middleman and developing models where they can invest in each other, where legal and appropriate – (SSOs)
9. Large asset-rich social sector organisations should consider supporting smaller organisations to take on property either by buying it for them or helping them to secure it by providing a guarantee facility where legal and appropriate (SSOs)
10. Ignore hype about the social investment market – (Umbrella bodies, SSOs)
