'Don't put charities off social investment,' David Floyd urges politicians

The managing director of Social Spider CIC says they are the biggest source of misinformation about the market

David Floyd
David Floyd

Politicians and charity sector leaders need to ensure the language they use to explain social investment does not put charities off the concept, David Floyd, managing director of the training and research social enterprise Social Spider CIC, has told the All Party Parliamentary Group on Charities and Volunteering.

The APPG, which is facilitated by the National Council for Voluntary Organisations, heard yesterday from Seb Elsworth, chief executive of Access – The Foundation for Social Investment, Geetha Rabindrakumar, social sector leader at Big Society Capital, John Smart, chief finance officer at Hackney Community Transport, and Floyd about the development of the social investment market in the UK.

Floyd said politicians were the "biggest source of misinformation about the social investment market", but the issues they raised tended to be those that "cut through" in the media and among the general public.

He warned of the "danger that politicians communicate things in a misleading way for the sector" and said the message about social investment coming from the vast majority of charities was "no thanks" because they were not ready to take it on.

Floyd said it was important that the messages about social investment explained the diversity of deals available, rather than overhyping applicability or over-promoting approaches such as social investment bonds.

Rabindrakumar said social investment had to be made to seem simpler and easier and organisations involved in social investment should "translate it in a way in which it is well understood and relevant".

She warned that many of the social investment instruments available were new for the sector and "not something that charities will have seen in previous lives", meaning it was important to explain how social investment was relevant to the issues that charities were tackling and the sectors they worked in.

She also warned against inequality of access to social investment, emphasising the important role small and medium-sized charities played in tackling social issues. Social investment was not right for everyone, she said.

Elsworth said the way social investment was explained needed to be more sophisticated and avoid a narrative that consisted of "grants down and social investment up".

Of the Discussing Access growth fund, which combines grant money with loan finance to lend to charities and social enterprises, Elsworth said charities should not get "focused on the interest rate" on offer – between 6 and 12 per cent a year – but instead on whether loan repayments were affordable according to monthly cash flow. 

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