Soap Box: Social investment might deprive the sector of its soul

Should charities be looking at other methods of raising finance, asks Jake Hayman

Jake Hayman
Jake Hayman

Social investment models are causing great excitement in the third sector, but what if it is a tool that codifies the worst of the sector and undermines the best? Sure, bridging loans can float organisations trying to survive cash-flow crises, and helping a charity purchase a property for which it's paying extortionate rent makes sense. But social investment can bring significant risk to the social sector. It encourages protection of models, not open and free dissemination. Investment has to be repaid, which means revenue streams need to be protected, competition snuffed out.

Protected knowledge goes against the ethics of a sector that should be dedicated to sharing, learning and collaborating. Any deal that relies on intellectual property lawyers codifies the worst of a competitive sector. The foundation funding model set this train in motion, pitting charity against charity and preferring owned "impact" to sector-wide progress. By funnelling cash as debt and equity to pitch-deck chief executives interested in growing organisations, we gentrify further an already homogeneous, London-centric sector.

Social investment could be a slippery slope: if you commoditise human life, you foster the "rational" economic decisions that create the need for charities in the first place. It excludes those most difficult to help, focusing on the more accessible 90 per cent. Better insight into "what works" is valuable, but the danger is that investment corrupts the focus of organisations by requiring them to meet quotas of short-term outcomes.

Social investment can do much good for many, but it might yet take the soul of our sector with it.

Jake Hayman is chief executive of Ten Years' Time, which advises philanthropists

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