Growing the social investment market requires less hype, substantially more transparency from investors and a recalibration of the role of Big Society Capital so that it focuses more on its impact than on its own existence.
These are three of the recommendations of the final report of the Alternative Commission on Social Investment, a 14-person team of commissioners from a variety of backgrounds who began their work in October last year.
It has been led by David Floyd, managing director of the east London-based community interest company Social Spider. Explaining why the commission was set up, he said: "We often hear from ministers, champions of social investment and the G8 that the UK is a world leader in social investment. Yet for charities and social entrepreneurs here in the UK, it doesn’t feel like that."
The report, called After the Gold Rush and published today, contains 50 ways to make social investment more successful, more inclusive, more diverse and less London-focused than it is today.
Among the 10 key recommendations are that social investors should be clearer about how the social aspects of their investments are considered, and that government policy should move away from looking to grow the market for its own sake, focusing instead on the needs of the third sector.
It recommends the development of a set of defining principles for "truly social investments".
It also says that politicians and social investment should "minimise all forms of social investment hype that might inflate expectations and under no circumstances imply that social investment can fill gaps left by cuts in public spending". It says that social investors, including BSC, should go much further in publishing information about their investments.
Big Society Capital’s role should be reconsidered to prioritise its impact over its own existence, the report says.
Professor Alex Nicholls, one of the commissioners and professor of social entrepreneurship at the University of Oxford’s Saïd Business School, said: "Since the financial crisis, we have seen increasing interest in how capital might be harnessed for social good. But the danger here is that we simply recreate models from mainstream financial markets and expect them to work in the social sector, while at the same time letting social values succumb to the power of capital. Instead, we need fairer, more open and inclusive investment models that can help to tackle inequality."