The social investment market needs comprehensive reform because, despite £600m of public investment, it was “fundamentally the same in 2019 as it was in 2011”, an inquiry has concluded.
The Commission on Social Investment, which was set up in 2020 to investigate the state of the social investment market and how it could better enable the growth of social enterprises, will today publish its final report.
The commission, which has been led by Lord Victor Adebowale, chair of Social Enterprise UK and former chief executive of the support charity Turning Point, will conclude that “social investment cannot work – and has no purpose – without social enterprise”.
The body will say that “the needs of social enterprises have been deprioritised over the past decade” and find that social enterprises in the regions and UK nations have been underserved by social investment, as have disadvantaged groups such as those that are led by black people.
The commission will say that “social investment continues to have a serious problem with inclusion and equity particularly, although not exclusively, in relation to race”.
It will suggest the government, in consultation with the devolved administrations, should develop a UK-wide social investment strategy that would provide renewed clarity and purpose to the social investment market.
It will call for a new £400m Frontiers Fund that would be given to the social investment wholesaler Big Society Capital, which the commission will say should have its financial sustainability target removed in order that it can provide “enterprise-centric finance to social enterprises”.
It will also recommend an additional £100m investment for Access – The Foundation for Social Investment, which would help to ensure the ongoing provision of blended finance to social enterprises.
Other measures to be put forward include a new Flexible Capital Taskforce that could work with charitable foundations to boost their investment in social enterprises and which the commission will say could unlock £380m of new capital by 2030.
It will also recommend the creation of a £50m fund that would provide work with black-led social enterprises to tackle the inequality in investment.
It will say that the recommendations could lead to 5,000 social enterprises growing, which would create 180,000 jobs either directly or indirectly, with 36,000 jobs in the most deprived communities.
This would add £3bn to the UK economy and inject more than £600m into the poorest parts of the UK, the commission will say.
Adebowale said: “Our report does not look to assign blame to any particular individual or organisation. We believe that the problems are essentially structural, but we must learn the lessons of what has and has not worked over the past decade.
“If we can make the structural changes outlined in this report, I believe we can make social investment work for social enterprises and, most importantly, enable them to create the jobs and opportunities which our country desperately needs.”
James Westhead, head of engagement at Big Society Capital, said: “ The commission constructively acknowledges both the challenges in growing social investment and the real progress that has been made over the last decade.
“Overall, we very much agree with the commission’s call for the government to further develop its strategy in this area, as well as devoting more dormant assets.
“We also welcome the suggestions for Big Society Capital to consider as we are always looking to make improvements in how we support the social investment market.
“We will consider these alongside other suggestions that have been made for the future of Big Society Capital, involving our full range of stakeholders, in order to develop the best way forward.”