Social investment should not be treated as "the cavalry coming over the hill to the rescue" by charities struggling for funding after losing out on grants, the chief executive of the social lender Big Society Capital told delegates at the Labour Party conference in Brighton yesterday.
Nick O'Donohoe told a fringe meeting organised by the Social Investment Forum, the infrastructure body for social finance, that social investment was not a replacement for grant funding and was intended to support entirely different types of organisations.
"It's not an answer to the cuts," he says. "It worries me when people say it is."
O'Donohoe also called for a clear definition of social enterprise.
"We're asking big businesses and government bodies to involve social enterprises in their supply chains," he said. "We can't ask them to do a social audit every time."
He said he supported recent proposals from the Social Investment Business to introduce a new group of local lenders. But he said it was necessary to grow the community development finance institution sector.
"CDFIs are sub-scale compared with other countries," he said. "The Labour Party needs to look at that if it is elected."
Ben Hughes, chief executive of the Community Development Finance Association, the umbrella body for CDFIs, said at the meeting that he hoped a network of local lenders could become "one-stop economic drivers" involving credit unions, CDFIs and other sector lenders and providers of money advice.
Hazel Blears, Labour MP for Salford and Eccles, told the meeting that there was cross-party support for social finance, but that public dislike of the PFI sector meant that any attempt to use private money for public policy was likely to be met with suspicion.
Sir Stephen Bubb, chief executive of charity leaders body Acevo and chair of the Social Investment Business, said that it was time for a "Futurebuilders II" fund to plug the gap between the supply and demand of social investment.
The SIB ran the original £215m Futurebuilders fund, which loaned money to charities to build capacity to take on government contracts.