The number of people interested in investing in social enterprise exceeds the number of good business propositions for them to invest in, according to social investment experts.
Speaking yesterday at a symposium organised by the European Association for Philanthropy and Giving, Rod Schwartz, chief executive of ClearlySo, an online market place for social business, said the sector needed to build competence more than attract more cash.
"We’re often focused on getting more capital into the sector," he said. "I think there’s more than enough capital. What we need is more good social enterprises."
Schwartz said the reason for the imbalance was that it takes longer to build skills in the social enterprise sector than to inject money into it.
"What we need to do is build good investment propositions, and that takes time," he said. "We need to make sure social enterprises have good governance, good marketing strategies and good financing strategies."
Nick O’Donohoe, global head of research and head of the social finance unit at JP Morgan, said that a flow of too much capital into the market was not necessarily good for social investment.
"Unleashing a vast amount of capital isn’t a good idea if there’s nothing to invest in," he said.
Caroline Mason, chief operating officer of the social lender Charity Bank, said her organisation had a regular flow of good investment propositions.
But she said that a flow of government funding into the sector had meant many organisations expected to be funded "if they ticked the right boxes".
David Hutchison, chief executive of the investment consultancy Social Finance, echoed the concerns at a Conservative Party conference fringe event on Wednesday hosted by the Charities Aid Foundation and the Community Foundation Network, called Who Pays for the Big Society?
"There’s a shortage of investment propositions, but there’s a lot of interest in funding social finance projects," he said. "What we need is robust investment propositions with a well-articulated social return for the new, interested investors."