I had the privilege of attending the first anniversary of the launch of Big Society Capital recently. As BSC is ClearlySo's largest investor, many would question the objectivity of what I might say about it. So let me just wish it a happy first birthday.
Two consecutive governments and many others seem to support social enterprise and social finance as a great idea. However, the evening prompted me to reflect on what the purpose of it is. This is a debate that has been raging recently, which we discussed in a recent blog post. I would like to describe the debate as one between purists and 'ladderists'.
The purists tend to see social investment as something that should be dedicated to encouraging a particular type of highly social organisation. There is not yet a uniform view on exactly what type of organisation ought to be supported, but purists seek to target resources at those organisations that are most focused on generating social impact and need the kind of support that BSC and other government initiatives are designed to encourage. They believe businesses that are not so purely focused ought to receive less or no support, because they are not really social enterprises. The world of the purist is black and white.
At ClearlySo we are in a different camp; we see many shades of grey (cue sniggering). Our aim is to bring the greatest possible sums of capital into the sector - and to achieve this, we might seek to attract mainstream investors with social enterprise opportunities that purists might consider unacceptable. I am reluctant to try to place BSC on this spectrum, but as an institution formed by an act of parliament, their remit is legally constrained.
In another debate, during the networking drinks, I confronted another purist - this time on the issue of social impact assessment. Her contention was that this work is valuable and equivalent in importance to the work one might do in assessing financial performance. Or, on a pre-investment basis, she argued that financial and social due diligence were equally valuable.
From a philosophical point of view, I agree with her. My problem is that we do not live in such a perfect world, even though I wish we did. Mainstream investors do not value social and financial analysis equally; they value the latter much more. If we can get them to start to use social analysis - even a little bit - then my hope is that we get them onto at least the first rung of the ladder.
Hence the silly term I coined, 'ladderists', to describe how we see ourselves. Over time I hope we can get the mainstream to climb the rungs, but the hardest bit is to get them on in the first place. The alternative, I fear, is that we will expend substantial effort to convince them they should jump high up the ladder, and we will fail.
The world needs both purists and ladderists, and one group is no better than the other. But I am definitely a ladderist, and ClearlySo is focused on getting people on the first rung. I have undying faith that, once we do, the mainstream will inevitably climb the ladder; competitive forces and their own desire will drive them.
Rodney Schwartz is chief executive of ClearlySo, which helps social entrepreneurs to raise capital