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Big Society Capital: The Performance Review
May 10th, 2013 Posted by jameselliotperry

In May 2013, a new leader was appointed to stimulate the creation of an emergent social investment industry and this leader was called Big Society Capital.

One year on, it is time to appraise the performance of this new leader of the industry. How is it shaping up?

The first thing to say is that the fundamental objectives have been met. Getting set up, clearing the EU and FSA regulatory hurdles, receiving the first deposits from the dormant bank accounts, getting stuck in to the policy agenda, appointing a quality core team and getting some capital out there were not foregone conclusions. Significant credit must be given to BSC for achieving this with such alacrity.

With a sector eyeing the considerable riches in its coffers, BSC has had the tricky task of navigating a route through the demands of a starving sector where investment propositions are often ‘in need of some development’, without losing touch with the task they’ve been set of achieving a positive net return on their capital.

As the year has progressed, BSC has generally done a good job of investing in propositions that have merited investment, giving some of the pioneering intermediaries a chance where perhaps the proposition has required a less comfortable ‘venture’ approach, and figuring out how this market might be grown in the medium and longer term. As a co-investor they have been a breath of fresh air and a pleasure to deal with.

As it looks back on the past year, BSC has good reason to feel satisfied and deserves credit for the solid start that has been made. Moving into the second year, the honeymoon period is likely to end as a number of issues come into sharp focus. The true measure of this sector leader will be in how it addresses the many challenges that lie in its path. These include:

Pressure to deploy

Social sector organisations need capital. Big Society Capital has it. But BSC’s capital has a demanding return expectation and it will only achieve its current mandate if it is careful only to invest it into propositions which have clarity and manageable risks. There is a fundamental mismatch between BSC’s supply of capital and the demand side. One way to address this mismatch is for BSC to focus on fewer, bigger deals with established market participants, such as Ecology Building Society and Charity Bank. This is a no-brainer, but if it happens at the cost of some of the smaller and more innovative deals, then the moment might be lost for BSC to lead some of the more fundamental changes to how investment capital and civil society relate to one another.

Policy interventions

Everyone knows that  the tax treatment of social investments is not currently optimised to stimulate the market. One way of introducing more of the risk appetite that the market so desperately needs is to address this through tax breaks for social investments. This way, some of the risk downside can be compensated by tax-break upside. BSC have done a good job thus far in making this case and will, alongside others, deserve considerable credit if their work bears fruit. George Osbourne is certainly making encouraging noises on this.

Proactivity

Investors typically respond to opportunities presented. But in this underdeveloped market, key areas in which the market must develop may be a vacuum. Unsurprisingly, given the people involved, BSC have a core strength in strategy, so see this more clearly than anyone. There have been signs of a willingness to be proactive and signal areas of particular interest for them, as a challenge for the market to respond to. Rather than raising eyebrows, this should be welcomed and encouraged.

Creating a new culture

In many ways the hardest challenge for BSC has been the establishment of a new kind of institutional culture. This is a challenge with which all social investment entities have wrestled. Some err on the side of the social (perhaps struggling with some of the financial), and some the opposite. BSC needed to become truly ‘bi-lingual’, speaking fluent finance and fluent social transformation. At the heart of this culture must be a recognition of the deep value of the social sector as well as the value of the financial services sector. It will fail if it recreates the macho culture and superiority complex that makes so much of the financial services industry so objectionable to so many. The first twelve months have raised no questions as to the financial fluency of BSC. A question remains as to the extent to which it is achieving fluency in the business of achieving social change. Engaging with social investment is a bruising experience for the social sector, as it comes to terms with new expectations. If BSC cannot bring the social sector with it, then it will have to move into a bunker. The recently advertised Social Sector Leader role at BSC is perhaps a recognition of the need to strengthen this area. It is crucial that this role is seen as strategically core to BSC and allowed to infuse every nook and cranny of BSC’s organisational culture, from top to bottom.

Pressure for co-investors            

Core to the purpose of BSC is to create a market, which means other investors must come and start investing. These other social investors are thin on the ground at the moment, and have limited capacity on a number of levels. Investors will come as the market matures and track record is developed. Whilst key in the longer term, in the short term this issue is a red herring. BSC need to be given the freedom to get the right things funded irrespective of the level of participation of other investors.

Risk of Politicisation

Labour see the establishment of a ‘Social Investment Bank’ as their idea, as it came out of the Commission for Unclaimed Assets, on their last watch. They were admirably supportive in the establishment phase. But take the Coalition government’s goal for London to become the global hub of social investment, add THE CUTS, smother with the rising political temperature in the run in to the 2015 election and season with a politicised name – and see what happens.

Leadership is about doing the right thing, not just the easiest thing. It is obvious that there is a serious mismatch between the BSC’s supply and the social sector’s demand, which creates a strategic problem. If the current return expectations are retained, BSC’s ability to work with many of the best social sector organisations will be severely constrained. It will only be able to fund ‘safe’ social investments, where intervention to address market failure is less needed. The alternative is to respond to the market lessons of the first year by gaining agreement from the powers that be to a tweak in the mandate – admittedly a conversation that might hold risks as well as offer opportunities. For example, were the £600m divided into different pots with different return expectations, the potential for responsive and collaborative approaches to the demand side might be transformed.

We all know that the end game is to show ‘big capital’ that social investments can make a return, and thus blaze the trail for a massive capital inflow for civil society organisations. And we all know that if we cannot demonstrate this then social investment will always remain a tiny niche.

But “I know that half my R&D budget will be wasted, I just don’t know which half”. Perhaps those in capitalisms R&D lab at BSC need to be allowed the same freedom as those in the R&D lab of any sensible established business – and be given permission to lose a bit of money. One way of doing this would be to carve out a ‘first loss’ pot to enable the intermediary businesses to scale sufficiently to hire teams and get to a financially sustainable point with capacity to properly manage investments. Perhaps such a pot could be provided by Big Lottery Fund.

Ultimately, proving the point with some of £600m whilst stimulating the whole market may be preferable to using all £600m to stimulate the parts of the market which are already the most viable.

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If it can’t’ be measured, it doesn’t exist …
April 12th, 2013 Posted by jameselliotperry

Albert Einstein’s great breakthrough came when he put known measures to one side. The notion that time and space were regular and linear was entrenched in science, and had led to an impasse which prevented it from making sense of the universe. By seeing that time and space might flex led to the Theory of Relativity, and led Einstein into a realisation that philosophical steps must be taken if breakthroughs were to be made. This philosophical context for his science led him to see that “not everything that counts can be counted, and not everything that can be counted counts”.
My wife and I recently took our children out of their local primary school to travel in the former Transkei for 7 weeks. We thought that this would be a wonderful experience for them, experiencing life on the road in a completely different culture. Their school was programmed to see it differently. Its Ofsted rating could be adversely affected by the absence, and by the prospect of a six year old and four year old performing slightly less well in their assessments. The scientific culture of measurement risks so narrowing the concept of education that the system becomes unable to see any benefits (which cannot be directly measured) of such a trip.
Social or ‘Impact’ Investors, such as Panahpur with whom I work, try to achieve their purpose by blending the art of achieving their social goals with the science of managing their funds. They make financial investments for social, as well as financial returns.
The key challenge of doing this is understanding if, and how, the art of achieving social ‘returns’ can be measured in any scientifically robust way.
Successive governments have all but admitted defeat when it comes to the state’s ability to solve certain intractable social problems. There is a general recognition that charities, faith groups and other civil society organisations have an important role in reaching the parts that the statutory social services cannot reach. But to deliver their potential, they require access to capital. Contracting them to provide services has often led to a repeat of the problems of state provision, with a focus on inputs rather than outcomes. All this has led to the emerging world of social impact bonds and payment-by-results (PBR). We invested in the first social impact bond at HMP Peterborough directly and have invested others subsequently indirectly. Payment-by-results is a now-fashionable idea which might direct capital to those who can actually solve these problems. If charities and civil society organisations can do what the state cannot and help people to transform their lives, so the argument goes, then let’s pay them when they deliver.
But most charities lack the balance sheet strength to provide services at risk. Which means that PBR leaves private sector providers as the only realistic option. These private sector providers have fiduciary duty to extract all financial value they can from these contracts and return it to shareholders. So PBR contracts can become a proxy for privatisation. The extent of the privatisation of social services resulting from this and other trends is well documented in Social Enterprise UK’s report, ‘The Shadow State’ and can be easily seen through the experience of The Work Program.
All this is complex enough before one brings Albert Einstein into it. But he would recognise that the intractable social problems that increasingly take the lions share of social service budgets can only be solved through the complex, time consuming and uncertain process of human transformation. Dysfunctional and deeply disadvantaged and distressed individuals need to turn their lives around, one by one. Graham Allen MP, through his work on Early Interventions, has demonstrated that the most cost-efficient interventions will occur during the first three years of an at-risk persons life.
The truth is that, in the context of gnarly social problems, building the link between inputs and outcomes is often impossible. What these social problems require are long term interventions, in the context of an uncertain rehabilitation journey and a chaotic client group. It needs persistence and, ultimately, love. Can one really measure the outcomes of particular interventions? Can a time-bound, tightly contracted and assessed financial confection achieve this deep change?
There is no question that the Social Impact Bonds – for example, with offenders at HMP Peterborough or with children at risk of being taken into care in Essex – offer an exciting new opportunity to create significant positive social change by aligning the state, investors and the taxpayer.
But perhaps we need a deeper discussion, where we have the humility to accept that the relationship between inputs and outcomes of many things that society needs cannot be directly measured. And where we allow ourselves to make the philosophical leap that delivering & measuring social outcomes is not necessarily linear and regular.
Should we do this, we are led inexorably to a need to rediscover the notion of common values. Inevitably, in the context of the available evidence and budgets, we need to agree that some things should lead to taxpayer savings through better long term outcomes for the most distressed people in society because they are the right thing to do.
If we can do this, we might be able to direct capital with appropriate rigour to the best placed organisations to deliver long term change. If we cannot, we risk PBR just being the latest in a line of contracting methodologies that fail to address the root causes of our problems. Or, as Albert Einstein might say, we may be doing what we can count but we may well not be doing what actually counts.

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Does the Transkei hold a key to solving welfare dependency in the UK?
April 09th, 2013 Posted by jameselliotperry

You know you’re in a good place when you’re having a ‘rocket shower’. It is a rickety contraption which looks a bit like a rocket with a small aperture at the base, into which you put some scrunched up loo roll, douse it with paraffin and then set it alight. To the satisfying noise of hot air rollicking up the tube of the rocket one can enjoy a hot shower where there is no hot water. When the paraffin has burned, the fire goes out and the water runs cold once again.
Bulungula and its rocket showers is a joint venture between a committed social entrepreneur and a remote Xhosa village in the Eastern Cape, South Africa. The region used to be known as the Transkei, and, abandoned by the apartheid regime, was virtually an independent Xhosa nation. This made it a no-go area for most whites, and has left it with a starting point for development more akin to the rest of Africa, rather than the one-off context of much of modern South Africa. The place is run by local staff and management, supported by their resident social entrepreneur JV partner – who takes a low profile. The locals drink in the bar and local children come to play the drums after school. There are no locks on any of the doors, and a genuine sense of visitors – who come mostly to enjoy the spectacular beach and isolation – mingling as equals with the locals. Bulungula operates a social enterprise incubator, established to support the development of local projects. The incubator, for example, has set up and funds well-resourced pre-schools for each of the four villages that are part of the joint venture, replete with Western expert volunteers such as Kate, an experienced psychologist from London on three month unpaid release from her NHS job.
By contrast, just down the coast, Coffee Bay is a small and much more conventional backpacker village. Many of the enterprises follow a more conventional model, with white owners employing black staff. ‘You must speak to the boss if you want to pay’. It is a place where backpackers go to party. Locals, many of whom are stoned, sit outside the backpackers in groups, pushing trinkets, excursions, magic mushrooms and dagga. The atmosphere is intimidating and adversarial. Petty crime is an issue.
The Bulungula model is complex and hard to operate. It took two years, once the social entrepreneur and the local community had agreed to embark on their joint venture, to get the requisite approvals from the government. It didn’t fit the boxes on the forms, it was too ‘different’. The more conventional Coffee Bay also brings tourist dollars, provides employment and stimulates the local economy. Conventional models are much easier to implement – it is the way things have always been done, it is understood.
So much of the collateral benefit of the Bulungula model is impossible to quantify. How does one measure the difference between an empowered local community who feel a sense of ownership of what is going on in their village compared to a disempowered local community who feel exploited by what is going on in their village? Or the myriad ways in which the capacity of local people is being built in Bulungula, versus the myriad ways that the capacity of local people is being suppressed in Coffee Bay? Both models are sustainable, and both are delivering for their respective owners.
One can look at crime statistics and literacy levels and so on, and these can be useful indicators. But this runs deeper and much of it cannot be measured because it is about human dignity.
What is striking is that in contrast to the dignity and involvement of the former, the latter has created something depressingly familiar – what we in the UK would recognise as a ‘welfare culture’. At Bulungula, the community is open, friendly and self-regulating. When an inebriated young local man starts to smoke in the bar (against the rules), it is the locals who quickly shoo him out and tell him off. They would do the same with any visitor, they are empowered to do so – it is their place.
In Coffee Bay, much of the community is closed, flat-eyed and threatening. There is no opportunity for the locals to break the rules by smoking in the bar because they are not welcome there. So inevitably many see the visitors as walking wallets. The only role available for them to take is to seek ways to access those wallets. Of course, some of those are legitimate, some not, some annoying and some downright dangerous to everyone. If you have so little to lose …
In the absence of a welfare system, there is no direct financial cost to this. But if you do have a welfare system, as we are currently finding out in the UK, it is cripplingly expensive.
In London, right now, there are a small and growing number of people who are battling against the enormous inertia of the way ownership and investment ‘have always been done’, and trying to articulate a different kind of capitalism with different boxes to tick. Bulungula clearly shows the critical importance of ownership, and of a long-term committed social entrepreneur with access to a special kind of capital – patient, inclusive capital which can buy into the broader vision and operate patiently to see blended value created, rather than chasing quicker and easier returns through the conventional model.
Whilst Bulungula is illustrative of why it is so difficult to do this, it also serves as an inspiration as to why it is worth grappling with the challenges of establishing a functioning social investment marketplace.
Give everyone in a community the dignity of a true stake in it, and much of the power that feeds the social problems arising from a dis-aligned, dependency culture might be removed. Might social businesses offer a key to solving those intractable social problems that seem to be the unattainable holy grail for so many successive governments?

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US-v-UK: The Social Investment Race Is On!
January 04th, 2013 Posted by jameselliotperry

It promised to be interesting, the first ever UK Social Investment Trade Mission to the US. Our meetings with the White House social innovation team and other US social investment leaders didn’t disappoint.

The trade mission was organised by UK Trade and Investment and the Cabinet Office in response to an invitation from the White House’s Office of Social Innovation and Civic Participation. The visit took place from 14 to 18 October and delegates visited Washington DC and New York, where we were hosted by a number of leading US social investment organisations including McKinsey, the Case Foundation and the Global Impact Investors Network. Delegates included representatives from Big Society Capital, Allia, the City of London Corporation, Social Investment Business, and Bates Wells and Braithwaite.

There is a perception in the US that the UK is leading the way in social investment. This is driven by recent innovations coming out of the UK, such as the world’s first social impact bond at HMP Peterborough and the establishment of Big Society Capital, the world’s first social investment bank. Further developments reinforce this perception – innovations in social investment products, such as Investing for Good’s charity bond (with Scope as the first issuer), and new infrastructure, such as London’s forthcoming Social Stock Exchange.

But the US didn’t become the world’s wealthiest nation by sitting around watching other people showing them how it’s done. The energy and quality of the US leaders in the field of social investment struck us in the UK delegation between the eyes. They are making notable progress on a number of fronts:

  • Outcomes securities:  the social impact bond and payment-by-results securities idea has been set alight in the US. Top level strategic thinking from mainstream financial services consultancy businesses, such as McKinsey & Co in New York, is creating a fearsome momentum. The involvement of Goldman Sachs alongside New York mayor and legendary investor Michael Bloomberg in the first social impact bond in the US has helped with this. They were citing Australia as a nation they see as breaking new ground in this field.
  • Social innovation funding: $95m of government firepower is being systematically applied into the venture philanthropy industry through its social innovation fund. This will leverage a further $250m of private funding. But more importantly it will stimulate considerable momentum into the field of evidence-based community interventions which deliver a level of human transformation that conventional state provision cannot achieve. We have nothing to compete with that in the UK.
  • Innovative policy: this UK government, and the previous one, have been way ahead of the global game in the development of policy innovation to stimulate the creation of a vibrant social investment marketplace, as evidenced by the 2008 Dormant Accounts Act. But initiatives like the Community Reinvestment Act, and the ‘Race to the Top’ (a $4.35bn incentive pot to incentivise innovation in education) have clearly created considerable momentum for change in the US.

There are other things for us to learn – in the US, the stimulation of the SME sector in general is seen as a key ‘social investment’ priority, given that it is the sector of the economy which drives the most innovation and new job creation. Their narrative also sees civil society organisations not just as a safety net but as a key driver of economic growth.

There is one critical area where the US does have a distinct advantage. There are a significant number of American entrepreneurs who have made multi-billion dollar fortunes  – the pioneers behind Google, Microsoft, eBay, AOL and so on. We were grateful to be hosted by Jean Case (the wife of AOL founder Steve Case) at the Case Foundation. Many of these entrepreneurs have given such fortunes to their foundations – the Case Foundation, Omidyar Network (the social investment company of eBay founder Pierre Omidyar), the Bill & Melinda Gates Foundation – that they now have the financial power of small countries. These people made their fortunes by refusing to accept the status quo, and inventing the systems of the future. They are applying their systems-thinking approach to the challenges surrounding philanthropy and social change. Their dissatisfaction is leading them to seek systemic change to government, business and charity. They have sufficient credibility and capital to operate in circles where they have the contact details of presidents in their mobile phones. Their foundations all have offices in Washington DC as well as Silicon Valley.

Other than Big Society Capital, we have no competitor for this combination of thought leadership, financial firepower and risk-appetite to back game-changing ideas. One action for the UK might be to see if we can stimulate such a group, or failing that to encourage the US pioneers to open offices in London as well as Washington DC. Omidyar Network already has.

A global race is on to create practical, investable solutions to the problems associated with the silos in which financial markets, government and charity have operated. The UK has taken an early lead. Like us, our US counterparts sense strategic opportunities in areas such as using the tax code to incentivise change, democratising finance and social services, and cracking how to finance early interventions. We are all looking to scale what works and find new ways of involving human as well as financial capital.

It is clear that the UK will not be able to retain our leadership position unless we are willing to create more ripples. The social impact bond and Big Society Capital were big rocks thrown into the sea of social investment. More big rocks will be required if the UK is to avoid being overtaken by some outstanding thinking coming from the US and elsewhere in the world.

Vying to lead this race will help to drive us, refine our ideas and deliver results. This UK trade mission was important because it also reminded us that as we compete, we can also collaborate and share best practice – because the only winners of our race will be the poorest and most vulnerable people in both of our societies.

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US Ambassador to Bangladesh celebrates with us!
November 14th, 2012 Posted by jameselliotperry

Oasis Bamboo Coffins (OBC), a Panahpur investee, was delighted yesterday to host Dan W.Mozena, the US Ambassador to Bangladesh, in our factory in Nilphimari, Northern Bangladesh. Ambassador Mozena was visiting the EPZ (Export Processing Zone), where OBC is are the only fairtrade social business operating in the Niphimari EPZ. This was the icing on the cake to add to our current treble celebrations of:

  1. The business moving into profit
  2. The business employing its 100th employee
  3. Our Fair Trade certification

 

Panahpur acquired the majority of Oasis Bamboo Coffins in January 2011. We have spent the last 2 years working in partnership with Oasis, Tindercapital and Dave How to scale the business, and are very pleased with the progress to date, and the transformation it is starting to bring to the community in Nilphimari. It is especially good to see James Khan (with his back to us in the photo), a Bangladeshi national who has grown with the company and now runs the manufacturing operation in Niphimari, as he hosts the US Ambassador on his visit.

We expect shortly to announce a deal to restructure the equity in the business, with a view to creating a profitable exit for the investors whilst returning the majority of the equity to the employees.

The team with the US Ambassador

Some of the Oasis Bamboo Coffins team wtih the US Ambassador

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Walking the Tightrope
September 17th, 2012 Posted by jameselliotperry

One of the many benefits of Big Society Capital is that its existence forces certain long-standing issues to be dealt with.

The question of ‘private benefit’ in social sector organisations is a particularly itchy open wound which the sector has scratched endlessly over the years. The reason for the pain is that both sides have a point.

On the one hand, goes the argument, if we are to attract the best talent and create the most social value, we must allow the individuals and teams creating that social value to benefit financially. It is reasonable that they should do so – making social ventures work is complex and draining, and requires huge personal commitment. Entrepreneurs must take significant risks and endure myriad pressures – arguably more than conventional entrepreneurs – and they are more, not less deserving of financial reward than conventional entrepreneurs. To deny them this is unjust and will constrain the sector by preventing their involvement.

On the other hand, goes the argument, private gain in social ventures is beset with moral hazard. There are inherent conflicts-of-interest in trying to create social value (often with the support and involvement of public funds) and trying to create private gain. There is a trade-off between surpluses extracted to enrich individuals and surpluses re-invested to promote the social purpose of the venture. Private benefit is for private enterprise and if we muddy the waters we confuse motivation and lose trust.

Big Society Capital could have taken the easy route, to define social sector organisations by legal form and effectively deny the existence of what it has called a “for-profit social social sector organisation”. Instead, it has chosen the difficult route – designing a tightrope to convey it between the two reasonable arguments that have been made for years by these opposing camps.

What a classy move. Let’s hope that the market accepts that BSC may need some flexibility to make adjustments to the set-up of their tightrope in response to changing market conditions and experience. Adjustments to the tightrope should be seen as a good thing, reflecting the reality that a rope that might be correctly set now may need maintenance if it is to remain taut.

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One Social Investment Market. Eight Questions. Answers to Follow …
August 29th, 2012 Posted by jameselliotperry

As the summer holiday season draws to a close, our focus moves from how to occupy the children to the opportunities and challenges that lie before us in the emergent social investment industry.

2011-12 was a heady time – the Big Society Bank (renamed Big Society Capital) was established and made a quality start. The ‘Outcomes-Securities’ market gathered momentum, with more social impact bonds and similar investment propositions being developed by a range of central government departments and local authorities. The early-stage social venture funding market also developed apace, with seed initiatives such as the Big Venture Challenge and Big Lottery Fund’s Next Steps, help for investment readiness with the Social Investment Business Investment & Contract Readiness Fund, the establishment of new funds such as FSE’s Social Impact Co-Investment Fund, and the fund-raising success of existing players such as Big Issue Invest Social Enterprise Investment Fund. Innovative new social investment products were launched, such as the Scope Bond. The democratic finance movement gathered momentum and a number of exciting new investment intermediaries were launched, such as Abundance. The Cabinet Office have done their level best to support the stimulation of this market with a number of thoughtful interventions.

Beyond the social investment market, the ‘breakthrough capitalism’ agenda continues to gather steam, with a general desire from the financial services industry to address the questions that surround it over whether it is to be something socially value-creative or socially value-destructive.

After the sugar rush of so many new initiatives, we should expect a come down as reality starts to bite. The truth, of course, is that setting goals doesn’t solve any issues – achieving them does. The really hard yards lie between the two. And the most difficult time is now, when the rubber hits the road as we set about achieving the goals that we have set ourselves.

As so many of us now crank through the gears, here are a few of the questions that will need to be tackled head-on in the coming year:

  1. Will Big Society Capital (BSC) be able to resist the pressure to deploy its investment capital too quickly? If it is to succeed, BSC must refuse to invest in propositions that have weak financial, or weak social impact, characteristics. In what is still an embryonic market, this will require patience in the likely face of impatience and pressure from many sides. How strong will they be able to be?
  2. Will Government be able to operate as an investment counter-party? Outcomes-based securities represent a major opportunity for market growth. But this requires government to have genuine openness to ideas from outside, and a willingness to relate and compromise in order to align taxpayer/social interests with investors. To do this, government commissioners will need to operate in new ways which run counter to current practice and culture. Will they be able to change?
  3. Will social enterprises be able to build the financial expertise to enable them to sensibly contribute to the discussion? Whilst there are exceptions, all too often social sector organisations with expertise and track record in delivering the social value we all seek are not ‘investable’ for repayable risk capital – they do not know what they do not know.
  4. Will social venture funds find the dealflow to make a significant social impact in the short to medium term?
  5. Will the social investor community be able to avoid alienating either the financial investment community or the social sector? Social investment requires a combination of two distant and alienated cultures – financial investment on the one hand, and expertise in achieving human or social outcomes on the other. Blending the two is tricky and risks alienating one or the other – or, for our sins, both.
  6. Will Treasury engage with the emerging social investment sector as the Cabinet Office has? Without the full engagement of Treasury, social investment may struggle to achieve the policy and practice alterations required to deliver a meaningful marketplace.
  7. Does the Social Investment marketplace have a role to play with public sector spin-outs, and if so, what? At a time when emergent ‘social businesses’ are generally early stage and high risk – lacking both scale & track record – can the scale and track-record of public sector spin-outs be married to the social and financial objectives of social investors to create scale & momentum?
  8. Will the Social Investment sector manage to find the language to talk to anyone other than itself? Those striving to make this marketplace happen tend to have first-hand experience of the frustrations of trying to bring about change in the context of the alienation in our society between the financial and social sectors. This alienation is reflected in the media, who do not know whether to talk about social investment as a social story or as a financial story. It could be ‘both’, but right now it is ‘neither’. If this continues, investor demand will remain weak. But if we crack it ….

If we cannot find answers to these and other big questions, then BSC risks coming under intolerable pressure, and the social investment marketplace risks remaining the size of a rounding error when compared with public spending, financial investment and even charitable giving.

Game on.

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“You Invest In Missed Bedtimes”
July 17th, 2012 Posted by jameselliotperry

Written across a sweet picture of a sleeping child,  the headline reading “You invest in missed bedtimes …” is what a JP Morgan ad on tube trains in London is using to sell savings products. The ad suggests that if you want to make this ‘investment’ count, you should buy their products – JP Morgan’s savings products can make the missed bedtimes worth it.

Besides the obvious bad taste and overclaim, this ad raises some interesting questions about the advertisers view of their target market – wealthy professionals who work sufficiently long hours to miss their children’s bedtimes. For example:

  • Do these professionals choose not to see their children at the end of the day?
  • If they do make this choice, is it because they do not value relationships with their children, or because they do not consider seeing their children after work as being important to their relationship?
  • If they do not make this choice, who does make it?
  • Is it possible to have a successful career as a professional in London without ‘investing’ in missed bedtimes?

At a time where parliament is embarking on a process prompted by a growing sense that banks have lost their moral compass, this ad raises a number of cultural questions that are worthy of consideration. Either professionals are making a free choice not to see their children, or ‘the system’ is making that choice for them and making it a pre-condition if they are to progress their careers.

Whatever the answer, this advertisement is an emblem of where our society has lost its way. If values stage a comeback, future generations might look at this ad and reflect on how grotesque the things that we have come to value have become.

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Abundance Launches First Offer!
July 11th, 2012 Posted by jameselliotperry

Late last year we invested in Abundance, described by The Guardian as a Building Society for the 21st century, more explanation here. Through Abundance, retail investors can buy a debenture on renewable energy infrastructure (e.g. wind turbines and solar farms) and benefit from the long term returns achieved – a bit like having your very own renewable energy generator. Returns can be paid direct through reductions on your electricity bill.

They have just launched their first offer, Great Dunkilns Farm, a wind turbine development in the Forest of Dean.

Abundance has the potential to signficantly alter the capital raising landscape for developers of renewable energy projects, and enable retail savers to benefit directly – avoiding the dreaded bankers. You can save as little as a fiver, make potentially above-market returns and help the move to a low-carbon economy. What’s not to like?

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