It wasn’t Big Society or social value that got Mr. Cameron out of Downing St to celebrate social businesses it was money; or at least the draw of it. Big Society Capital, long planned and much mooted by Mr Hurd MP launched and if it had not been for the Prime Minister getting them some media interest, it’s unlikely that many social enterprises may not have even noticed.
Big Society Capital (BSC) is a wholesaler which will lend to social investment finance intermediaries (SIFIs), which will in turn lend to social businesses at a slightly lower interest rate than the High St Bank. I hope that the spending on both BSC and all the social investment finance intermediaries will be kept to a minimum or the £600m available will soon be frittered away. I also hope that the lending process will be attractive and accessible and sensibly match the interests of socially motivated investors with the need for capital in the social sector. There is no doubt that we need risk and working capital in the same way that any business does.
At LEYF we have been investigating how to get investment to repeat our model across London for some time now. We found a lot of rhetoric that did not translate into any meaningful investment; partly because many investors don’t get social value as a part of an investment return and also the offer to businesses is so risk averse that it was not viable. Our real breakthrough was winning a contract to work with the Social Business Trust (SBT) which has brought together six large businesses which cover all the elements of investment, money, management, communication and compliance. For us, this has led to us being treated like a proper client and with the offer of serious money to inject into the growth strategy. The team making it happen in the form of SBT get the three elements right, social, business and trust. This last element, trust, being the actual glue that enables us to form the kind of relationship that will allow growth, expansion and business sustainability.
I hope that the launch of BSC will allow for more SBTs and that the more we use this means of investing for growth the more confident we become in the market place. There is a risk that smaller and lower economic value businesses will not attract funds through BSC but it has the opportunity to leverage some larger mainstream public sector services to enter the market. The fact to remember is that social businesses are there to respond to a market need but in a way that adds social value. We need to saturate the market with social enterprises and investment can help that. As Bollinger sponsors of tomorrow’s Oxford and Cambridge Boat Race proudly declare on” Life Can be Perfect” and so it can if we have the chance to raise more glasses and celebrate a social enterprise takeover in a capitalist society.
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