Big Society Capital was set up five years ago to help charities and social enterprises access the kind of repayable finance they need to become more sustainable and to grow their social impact.
Social investment has come a long way over those five years. We’ve seen a big growth in the number of investments made, and more confidence in making investment deals. We’ve seen a far wider range of investment models develop and many more funders to choose from. We can also now see a realistic path to sustainability for social investment.
But this isn’t enough. There has been considerable progress but much more to do. Here are some of the lessons we’ve learned after 63 investments into 36 fund managers and social banks (our intermediaries), reaching over 420 social organisations:
It’s tough. Developing social investment takes time and effort – just like any major new approach. Balancing affordability for charities and social enterprises, with the risk and returns that co-investors need, means achieving progress is challenging. Social investment is not for everybody, but it is a crucial tool for many and can achieve substantial impact.
Innovation is even tougher. Venture funds, those that support early-stage innovative organisations with high-growth potential, face the greatest challenge because of the high risks and often longer paths. More blended finance and venture philanthropy is needed to make this a success in the UK: it’s a vital route to new ideas, new energy, and addressing new challenges in society.
Public sector markets are tougher still. Business-to-public sector models frequently grow much more slowly than business-to-consumer models. New approaches are needed to get innovation into public services, and we are starting to see these develop.
Social risk is very real. If a charity or social enterprises takes on investment and fails, the risk isn’t just financial. It could mean that vulnerable people suddenly lose the support they need. This has to be factored into decision making: for charities and social enterprises when taking on investment; for intermediaries when they make investments; and deciding when to intervene if an organisation faces difficulty. There have been some very courageous and capable leaders demonstrate how to avert harm to beneficiaries in difficult times.
Leadership is critical. It takes strong and resilient leadership to take a social venture to its full potential to help disadvantaged people. It’s that quality of leadership, that combination of enterprise savvy, inspiring others, and including the people it’s for, that makes it all work.
Impact management is challenging but essential. Improving people’s lives is the goal. However difficult it is to get useful impact information, it is a must have. We have put forward seven principles for good impact practice, drawn from the experience of our work to date.
It’s a growing and powerful movement. Social investment is growing and achieving more. It is a global movement of people who want to their money, their talent and expertise, into its highest purpose: improving people’s lives.