Sector will need to ‘make the case’ for social investment during economic crisis, Big Society Capital warns

Social investment experts will need to step up efforts to “make the case” for the sector during the economic crisis, according to the chief executive of Big Society Capital.

Stephen Muers, who leads the social investment wholesaler, said organisations working across the market, including BSC, should explore the best ways to promote their aims because investors are “a bit nervous” about the future.

He also said he was optimistic about the performance of BSC’s new £61m venture portfolio, which he expects to deliver high impact through some of its investments in social start-ups.

Muers told Third Sector today that there will be challenges bringing more investment to social enterprises in the next year “because investors are a bit nervous at the moment”.

He described the economy as “going through a bumpy time” and said: “So we are going to have to work even harder to tell the story to the investment world about why looking at investing in social mission organisations, social enterprise [and] charities is worth doing, [and that] some of those risks are worth taking, both for the impact and because it is financially viable.

“We are going to have to think about how we tell that story more effectively. And that is across the sector, it is not just a BSC thing. We are going to have to collectively make that case, and it is not going to be easy.”

Discussing BSC’s Venture Fund, which has invested in fund managers backing social start-ups working in areas like affordable credit and financial inclusion, Meurs said the investments are “still a relatively small part of our portfolio, in terms of the amount of money, but it is growing and it is interesting, and the potential for impact we think is really high.

“It is definitely high-risk, and some of these organisations, because we are investing in pretty small startup social purpose organisations – definitely some of these won’t succeed. But some will, and there will be some big successes.”

BSC is also putting time into influencing government ministers and officials, where Muers said the funder was “getting a little bit of traction”.

He said: “If this government is genuinely serious about tackling the disparities in wealth and economic growth across the country, then social investment has got a really good story to tell.

“Let's see whether the government listens. Who knows. I used to work in government, so I am realistic about this. But we are doing our best.”

Last year, BSC said it hoped the value of social investment in the UK would reach £10bn in the next four years, double its current size.

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