Good deals and social enterprise
The role of social investment in Big Society is something communities, investors and regulators are still shaping, and the challenge is, according to Nick Hurd, minister for Civil Society, how to ‘get it right.’
He also called for ‘enterprises to invest’ when the Big Society Bank opens for business in the second half of 2011 so that it has the “opportunity to hit the ground running.”
Hurd was joined by Sir Ronald Cohen, former chair of the Social Investment Taskforce1 whose ten-year report was delivered in April this year at social investment conference Good Deals 2010. Cohen said: “one of the key challenges we faced is that you cannot have social impact by having an incentive here and an incentive there and reminded delegates of some of the themes in the report:
- The government needs to play a powerful enabling role and provide incentives because social returns do not attract capital the way commercial ones do. This means more tax incentives to build on the Community Interest Tax Relief (CITR), consistency of action and follow-through.
- More cornerstone funding along the lines of the £20m that matched the £20m raised by Bridges Ventures, a mission-drive venture capital fund set up by Cohen in 2002 which went on to expand this to £75m.
- Philanthropic activity needs clearer guidance from the Charity Commission so that trustees of charitable foundation s know they are acting in line with their objectives if they make social investments. A spokesman has since confirmed to Caritas: "We are in contact with social investors and HMRC in relation to this issue which will be covered in our new guidance on investment matters. We will be publishing this for consultation later this month and will consider all submissions before publishing the final guidance." It is anticipated the revised CC14 (due at the end of November) will deal with this issue.
- More detail on the flows of capital from banks into areas starved of investment is needed so that comparisons can be made. This works well in the US where organisations with over $1bn in assets are required to report data on small business lending and are regularly examined to see if they are meeting the credit needs of communities suffering from financial exclusion.
Esmee Fairbairn Foundation CEO, Dawn Austwick responded that “while there is clearly a movement and excitement about engaging with these forms of funding”, foundations are independent entities and have to “think about how we steward and husband our money both today and tomorrow.” Austwick added how important it was to make sure that the ‘tiddlers’ are not forgotten. In other words, the small, local grassroots entities who passionately want to change the world in a certain way but have not got the funding capability behind them. She believes that there is a real opportunity to “redefine and revitalise philanthropy” but that the new paradigm has not yet been entirely worked out. “We’re using existing ones from the finance and social worlds and trying to blend them together”, she said.
1. www.socialinvestmenttaskforce .org/downloads/SITF_10_ year_review.pdf
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