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, finally launched; but had it not been for the Prime Minister helping out on the PR front, it’s unlikely many social enterprises would have even noticed.
Of course, there is no doubt we need risk and working capital in the same way that any business does. But how will this shiny new opportunity work? Essentially, Big Society Capital (BSC) is a wholesaler which will lend to social investment finance intermediaries (SIFIs), who will in turn lend to social businesses at a slightly lower interest rate than your average High St Bank. I can only hope that spending on both BSC and all the SIFIs 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.
At LEYF we have been investigating how to get investment to repeat our model across London for some time now. We certainly found a lot of rhetoric that did not translate into any meaningful investment; partly because many investors just don’t get social value as a part of an investment return, else the offer to businesses was considered so risk averse that it simply 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 elements of investment, finance, business 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 a thoroughly considered and fully costed growth strategy. As the team making it happen, 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 real growth, expansion and business sustainability.
I hope the launch of BSC will allow for more SBTs, and the more we use this means of investing for growth, the more confident we will become in the market place. There is of course a risk that smaller and lower economic value businesses will not attract funds through BSC. Nonetheless, it still represents a genuine opportunity for some larger mainstream public sector services to enter the market. The key fact to remember here is that social businesses are set up to respond to a market need, but in a way that adds explicit social value. And if we want to increase this value, we have to saturate the market with social enterprises; and investment can help with this. As Bollinger, sponsors of tomorrow’s Oxford and Cambridge Boat Race, proudly declare “Life can be perfect”; and so it can, as long as we have the chance to raise more glasses and celebrate a social enterprise takeover in today’s capitalist society.