Expert view: The right mix for social investment

Successful city investors have a nose for making money. Their employers - big financial institutions - have spent decades and millions of pounds developing their people and giving them the skills to do this.

In the voluntary sector, grant funders have developed people who achieve high social impact for every pound received in aid. What happens when you merge these two disciplines?

Mixed bag

In the social investment market, we are trying to work this out. When you mix the skills of the third sector and the financial world, the sheer weight of expertise needed - cashflow analysis, repayment arrangements, quasi-equity, royalties, social outcome monitoring, security, relationship management, user involvement and state aid - can seem overwhelming.

My experience is that having a strong mix of people with generalist skills, such as understanding a diverse range of organisations or services, and specialist skills, such as special-purpose vehicles or quasi-equity deals, provides balance to a team, as well as great learning opportunities. Hard skills - the ability to provide comprehensive financial analysis of business plans and cashflows - need to be combined with soft skills - the ability to unearth the commitment and competency of the people involved and develop long-term, honest and fruitful relationships with them.

This isn't simply about making sure the numbers add up. A structured competency skills framework can provide a vehicle for staff to move from specialist to generalist roles and vice versa. It can also build confidence through experience of working on new finance products, and improve technical abilities.

A shift in focus

At Futurebuilders England, our core business is analysing and managing third sector loans. As more of our investees move from drawing down funds to delivering public services, our focus has had to move from application assessment into portfolio management.

These require similar skill-sets, but different approaches to the relationship. We believe a new social investment workforce is emerging. If we are to define this workforce and nurture its development, social lenders must revisit some simple funding truths: focus on the people, understand the market, identify the risks, build trust.

We can't be experts at everything, but we can exploit the skills of different disciplines to successfully grow professional social investors.

- Peter Deans is operations director at Futurebuilders England 

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