Interview: John Kingston, director, Venturesome

Social investment in the UK needs better cooperation and communication if it wants to maintain its rapid development, according to John Kingston, director of social investment fund Venturesome.

"So far, the story of the social investment market is very much good news," says Kingston, whose organisation today publishes a report outlining its views on the state of the social investment sector.

"Compared to where we were seven years ago, the progress that has been made is stunning. But the next phase must be for us to have clarity."

The report, Financing Civil Society: a practitioner's view of the social investment market, suggests that risk aversion, a lack of expertise and an inefficient marketplace are all hampering social investment.

Many charities, it says, retain a "grant-dependent mentality" and "fear the expense and strategy shift needed" to move to other products.

"Seven times out of 10, when organisations approach us, what they need is grants," Kingston says. "But sometimes they need to look at the other options available to them.

"If you're looking at buying your building, maybe you should take out a mortgage. If you're holding a fundraising event, it makes sense to get your costs underwritten."

He says that investors often perceive charities to be higher-risk investments than they actually are - a view confirmed by the high repayment rates asked by social lenders.

The report suggests trustees and senior management also suffer from a lack of experience and good advice.

It says that potential lenders sometimes don't understand charities' financial models, can find it difficult to balance social returns against financial returns and need to engage in more co-investment and cooperation.

Kingston says research is also needed into the size of the market and into past deals and why they have succeeded or failed.

"What is needed now is more sharing of information between all parties," Kingston says. "There are communication problems because we don't have a common language at the moment.

"When a market becomes sophisticated, the financial language becomes very precise. But we haven't reached that point yet."

The report is available from www.venturesome.org.

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