Developing the social investment market to its full potential could take decades and requires long-term commitment and discipline, according to the chief executive of Big Society Capital.
In his introduction to the social investment wholesaler’s annual accounts, filed at Companies House yesterday, Nick O’Donohoe writes: "We are confident that a robust social investment market is beginning to develop and are proud of the role we are playing."
He writes that development of the social investment movement has accelerated over the past five years – BSC was launched in 2012 – thanks to "active policy support from successive governments". He says: "Even the best policy initiatives can take decades to realise their full potential. They require a long-term commitment and the discipline to see them through. Building the social investment market is no different."
O’Donohoe’s introduction says that social investment needs "ongoing support from future governments" and urges the next government to make a substantial commitment to an outcomes-based approach to public services. "We will support the next government to do this and work with the social investment community to ensure the right finance is available to help to enable it," he says.
O’Donohoe says that government must address "the cold reality of current procurement and commercial practice" in order to involve more third sector organisations in public contracts. He also warns that charities and social enterprises that seek funding must think carefully about whether social investment is right for them. He says: "Any organisation taking on capital needs to recognise where loans or other investment is appropriate."
The document also sets out the organisation's priorities for 2015. It says that BSC will invest in research to help understand where social capital can be most valuable, work to get better at highlighting where social investment works and where it does not, and work to improve transparency in social investment, citing reports, including that of the Alternative Commission for Social Investment, that have called for this.
"We have always had a commitment to transparency, and indeed it was one of our founding principles," O’Donohoe writes. "Focusing more on this will be a priority in 2015."
The accounts show that the organisation has total assets including its investments of just less than £300m, up from £221m at the end of 2013. In 2014, BSC made what the accounts describe as in-principle investment commitments of £65.5m, and has made a total of £179.6m of in-principle commitments since its launch, of which £36.2m has been drawn down by charities and social enterprises. A further £200.8m has been committed by BSC co-investors, the accounts say.
BSC will next month launch a separate annual report for the sector, providing more user-friendly information about the investments and commitments it has made.