Social investment needs to make good use of its reach

The UK's social investment sector has a huge challenge ahead to close cultural and geographical gulfs, says Nick Temple, director of business and enterprise at Social Enterprise UK

Nick Temple
Nick Temple

My ongoing attempts to clear my desk of clutter took another hit in the past few weeks with the delivery of several new research reports on social investment.

From the Boston Consulting Group's The First Billion: a forecast of social investment demand to the Big Lottery Fund's Investment Readiness in the UK, there has been no shortage of reading on the topic of late, and sizeable pieces of work they are too. This is where having a decent length commute comes into its own - I've managed to get through both these tomes and other forthcoming pieces of interest.

What struck me reading them is the huge challenge now facing the UK's social investment sector. Much of the 'hard' infrastructure has been put in place - an extraordinary feat. But the success of this ambitious undertaking will depend on getting the 'soft' stuff right: this means closing cultural and geographical gulfs.

Extraordinary reach and potential

Think about it like this: social investment is a large-scale national and international movement with extraordinary reach, potential and excitement behind it. But for it to deliver on even a fraction of its promise, it has to reach and affect local and regional ventures. One can see this in the reports mentioned: one from the Boston Consulting Group, a global management consultancy with offices in more than 75 locations around the world, and one from the Big Lottery Fund, which delivers millions of pounds of funding to organisations and groups tackling problems in local communities across the UK. Or one can compare Goldman Sachs's $9.6m investment in a programme aimed at reducing reoffending to the Investment and Contract Readiness Fund's decision to grant money to help West Itchen Community Trust to become investment-ready, so that it can tackle challenges in deprived areas of Southampton.

What this breadth means is that there can be a gulf between the parties involved. And it is not only a gulf between international and local, or private and third sectors, but also one of scale, geography and - perhaps largest of all - perception.

The BLF report provides real insight into mismatches of perception between investors and investees, including revenue models, type of finance supplied (as opposed to that demanded), financial acumen, support provision and required skills.

Examples of real impact

It is often culture that prevents the bridging of these mismatches, and examples of real impact on the ground will be crucial to changing that culture. This is the responsibility of brokers, intermediaries and market-builders (including Social Enterprise UK). But it falls even more heavily on Big Society Capital because of its mission to build a plural social investment market.

It is already making investments that benefit local communities across the country, but a visitor to its website would be hard pressed to know that, and anyone thinking of acting as an intermediary in order to tackle a particular local problem might not easily find a way in. Roadshows are fine but will only ever reach a tiny percentage of the charities and social enterprises that they need to. And they do need to: it is those charities and social enterprises that Big Society Capital was established to help, and getting investment into them is ultimately how it will be judged.

Nick Temple is director of business and enterprise at Social Enterprise UK

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