As a new and growing organisation, it is exciting to have a steady flow of new people joining the team, bringing with them diverse experience and new enthusiasm. This week I am very pleased to welcome two new individuals to our senior team: Jeremy Rogers as our new Chief Investment Officer and Geetha Rabindrakumar in the new role of Social Sector Leader.
Since our launch we have been grappling with the question of what being a ‘social’ business means and how it can be evidenced to various stakeholders that have different definitions, motivations and priorities. We have attempted to define the ‘unregulated’ social sector in our governance agreement, but along with other social investors, grant makers and commissioners, we know that we need to do more in developing our understanding of this area so that we can build a diverse market that provides appropriate financing to a range of social organisations, and ensure that social impact is not restrained by legal form.
The Government’s commitment to establishing a social investment tax relief is an extremely timely initiative with the potential to transform the social investment market. However getting the terms of the tax relief right will be essential and there are some critical issues that still need to be addressed if it is to be effective.
One of Big Society Capital’s key objectives is to increase the flow of capital into the social investment market and in particular to attract greater and more diverse sources of finance into the sector. As part of the market building effort to meet that objective we hope to encourage the launch of social investment products suitable for both retail and institutional investors.
This year, as part of his presidency of the G8, the Prime Minister hosted the Social Impact Investment Forum. Here you can watch the footage from the event on 6th June 2013, including contributions from David Cameron, Sir Ronald Cohen and Nick O’Donohoe.
Strength and diversity are key to our vision for the social investment market. A new report released today co-commissioned by Big Society Capital provides evidence that although we are one step closer to reaching this vision, there are still some challenges ahead.
We have just updated and published BSC’s investment policy and launched a “Social Impact Tests and Thresholds Assessment” document. Together, the documents should clarify our three investment objectives of social impact, contribution to market development and a financial return. The investment policy document also sets out some of our key investment conditions and outlines our investment process.
The educational attainment gap is one of the UK’s most pervasive problems. In spite of improved general educational attainment over the last decade, the number of young people, particularly those from socially deprived backgrounds, leaving secondary school without any qualifications or unprepared for the world of work has increased.
At Big Society Capital we’ve just published our first ever annual report. The report details what Big Society Capital has done in terms of making wholesale investments, encouraging others to invest alongside us and championing the social investment market more generally.
Today is an important day in the development of the social investment market. The announcement by the Chancellor in his Budget today that he will introduce tax incentives for social investment will be pivotal in encouraging greater numbers of individuals to provide funding to social sector organisations. This investment can help social sector organisations to grow and make a big difference to a large number of society’s most vulnerable. Until now, the lack of appropriate tax incentive has been a barrier to unlocking the potential of these individuals to support social investment.
Should social sector organisations be treated differently to small businesses when it comes to raising much needed investment? Well, that’s how they are currently treated by the tax system. Existing tax incentive schemes, such as the Enterprise Investment Scheme and Venture Capital Trust scheme, have a good track record of encouraging investment in small growing businesses. But these remain by and large unavailable to investments in social sector organisations. Without resorting to the detail, this is because existing reliefs require investments in equity that large numbers of social sector organisations simply do not have. Even more confusing is that tax relief exists for donations to these organisations – but investments are left out. Given the increasing role that social sector organisations are playing in public services, the lack of tax incentive does not make sense.
Since it opened in April, Big Society Capital (BSC) has committed £56 million to 20 separate organisations. We have made cornerstone investments in a series of Social Enterprise funds managed by new and existing intermediaries. We have committed to six newly created Social Impact Bonds to fund charities to provide innovative interventions across a range of social issues in a diverse set of locations around the UK.
Evidencing social value has become a pressing issue for social sector organisations to enable them to showcase and demonstrate the value they are delivering. This is particularly relevant in the context of increasing payment by results commissioning by government and the Social Value Act 2012 that means public bodies need to consider social value in procurement processes. More broadly it is a way of targeting increasingly scarce resources, including funding and investment, to their most effective use – with a focus on the difference that is being made to the lives of the ultimate beneficiaries. It is also a way in which to be accountable to stakeholders.
Today Big Society Capital (“BSC”) has published a ‘market update’ that sets out our view of how the social investment market might evolve. It also calls for specific investment ideas focused on health, social care and ageing; on community enterprises and assets; and on affordable housing. You can read the detailed document here.