One of the misconceptions I’ve heard most frequently from charity leaders about social investment is that it’s all a London and the south east game.
It might be true that a relatively large number of social investment organisations are based in London. However, there is a growing number of exceptions to this – from well-established lenders such as Key Fund and Northstar Ventures, to those newer to social investment, such as GMCVO in Manchester and First Ark in Merseyside.
More significant, though, is where the investment is actually going, and the picture we can start to see is really quite different from the popular perception.
Big Society Capital’s most recent annual review says that, of the 799 organisations that have accessed repayable finance from social fund managers or social banks in which they have invested, 84 per cent are operating outside London or on a national basis.
Looking at the 166 loans made by the 12 organisations that are currently making smaller investments through the Growth Fund – which is funded by BSC and the Big Lottery Fund – there are concentrations across the M62 corridor, in the south west, around Newcastle and in London.
Looking historically the picture is similar. CAF Venturesome published figures on the distribution of its lending when it made its 500th investment in 2016. Only 17 per cent of its investments were in London. Futurebuilders showed a similar pattern, with 76 per cent of loans being made to organisations outside London or working England-wide, with the most commonly lent-to regions outside of London being the north west (15 per cent) and Yorkshire (12 per cent).
So the data shows that there is no disproportionate focus on London in terms of where social investment is going. From our work and in talking to other social investment organisations, we do see some more subtle patterns in geography that we need to better understand. For example, the East Midlands and the east of England tend to be relatively cold spots, as are parts of the south east outside London.
What might be more significant though, when we zoom in from looking at a regional picture, is the extent to which social investment is reaching charities and social enterprises based in rural communities.
Through the work of our partners operating around the country that have tried to expand to more rural areas, we have seen that lending opportunities do tend to present themselves more quickly in urban areas.
Voluntary Organisations’ Network North East and the Key Fund have recently published a report looking at the appetite for social investment among rurally based organisations in Northumberland, the least densely populated county in England.
The findings show that although overall awareness of social investment was reasonably good, respondents were less confident in their understanding of specific investment forms. More significantly, half of all those who responded felt that they faced barriers to learning more about social investment, and 75 per cent of organisations surveyed felt geography played a negative role in them accessing the support they needed.
The report makes a number of recommendations that might address these challenges, including establishing common definitions to overcome some of the language barriers and myth-busting opportunities, in particular real case studies and hearing from peers who have been through the experiences of raising finance.
Good Finance is cited in the report as a useful starting point, with both a comprehensive glossary and a number of case studies. Opportunities to "hear from a peer" at the 32 Let’s Talk Good Finance events, which have been held around the country over the past 18 months, have also been popular, and from these a number of common themes have emerged. These events have not only been in big cities, but in locations including Pool in Cornwall and Horncastle in Lincolnshire and are usually run in partnership with a local infrastructure body.
With continued work from investors and intermediaries to reach out to charities and social enterprises based in rural communities, we can ensure that the opportunities which social investment presents are accessible by all.
Seb Elsworth is the chief executive of Access, a foundation that helps widen access to social investment for charities and social enterprises