For the social investment industry, championing equality and diversity ought to be obvious.
A growing stream of work, much of it funded by the Connect Fund, has been exploring different challenges around equality and diversity in the sector, from ensuring that social investment is flowing to charities and social enterprises with diverse leaders, to investing in organisations with specific equalities missions, as well as ensuring that our own house is in order.
A number of projects are seeking to address the first of these, including work by the Greater Manchester Centre for Voluntary Organisation, Voice for Change England, the Black South West Network, the LGBT Consortium and Disability Rights UK. Many of these are seeking to identify the specific challenges and barriers that organisations with diverse leaders experience when trying to access social investment.
A number of common themes arise. Knowledge about social investment is often low because communication is not tailored and leaders of those organisations operate in distinct networks. Organisations themselves might be smaller, with constrained capacity to explore new enterprise models and to investigate different investment opportunities. Leaders of these organisations might not know any peers who have taken on investment and could advocate.
To address some of these challenges, dedicated tools are being developed. For example, the Lincolnshire Community Foundation has produced a resource called On an Equal Footing, supporting and empowering women and women-led organisations in the East Midlands to access social investment opportunities.
In terms of investing in organisations that have specific primary missions to address inequalities, a report on equalities impact investing was published last week and makes for very interesting reading.
It shows a clear need for the equalities sector to be strengthened and an opportunity for social investment to play a role. It also shows that a clear majority of social investors see advancing equality as central to their mission.
However, the flow of investment is not currently matching that ambition. Of the equalities organisations sampled in the research, 5 per cent had sought investment and only 2 per cent successfully. Those leaders highlighted barriers and concerns related to both the feasibility and ethics of obtaining and utilising repayable finance given their typical small size, their remits and the nature of their activities.
Central to the ability of equalities organisations to access investment is the existence of an enterprise model that can generate a surplus. A challenge here is that many equalities organisations undertake activity that might not be income-generating, such as providing advice or campaigning. However, as the report highlights, this is too simplistic a view. A third are already trading and many equalities organisations are working in areas such as education or employment support, where enterprise models are already well developed.
Many equalities organisations are relatively small and their capacity is therefor constrained. Creating the space for leaders of equalities organisations to develop those enterprising ideas and explore investment opportunities is essential. There is also an opportunity for the equalities sector as a whole to build a better knowledge base about which enterprise models work and the kind of support and financing they need to get off the ground.
The Diversity Forum for Inclusive Social Investment has carried out research looking at the state of diversity within the social investment sector itself. It shows that the sector has work to do.
In terms of the proportion of women on boards, social investment performs better than the finance industry, but not as well as the broader third sector. Black, Asian and minority ethnic women are the least likely group to hold directorships in the sector, taking only 2.8 per cent of board seats. People reporting disabilities are also under-represented on boards, with only 7 per cent of directors in social investment reporting disabilities, compared with 16 per cent of the population.
The research went beyond looking at protected characteristics and also looked at class and socio-economic background. It found that 40 per cent of directors and 33 per cent of executives in social investment went to fee-paying schools, a proportion up to six times higher than in the wider population.
The forum has developed a series of actions that people and organisations working in social investment can take to help address these challenges. A diversity champions group from across the industry meets quarterly and organisations in the sector are encouraged to sign the forum’s manifesto.
In supporting more leaders from diverse backgrounds and organisations with specific equalities missions to take advantage of social investment, and by ensuring our own house is in order, social investment can live up to its potential in supporting equality and diversity.
Seb Elsworth is the chief executive of Access, a foundation that helps to widen access to social investment for charities and social enterprises