With over 500 delegates this year, Good Deals has become the UK’s premier social investment conference. Here’s my five ‘takeaways’ from Good Deals 2013:
(1) UK social investment is beginning to get the idea that the most exciting financial products aren’t necessarily the ones that best meet the needs of social enterprises and charities – the tone of the discussion from the platforms seemed more pragmatic and less self congratulatory than in previous years. In the ‘Why social investment’ plenary on Day One, Big Lottery Fund‘s Matt Roche, made clear that social investment was ‘not a magic wand’ while outgoing Big Society Capital chief operating officer, Caroline Mason, noted that the ‘conversation has been about mechanics of finance rather than what it can deliver’.
(2) One necessary next step is more work from social investment intermediaries to understand what social enterprises and charities actually need & why. While the tone of leading figures in social investment is becoming less exuberant and more thoughtful, it’s still not immediately clear what either Big Society Capital and/or social investment intermediaries are doing to understand the needs of the market they exist to serve – and bridge the gaps that currently exist between supply and demand. Good Deals 2013 provided plenty of chances for charities and social enterprises to explore whether they were ready for social investment, not many for investors to explore whether they were ready to engage in social change.
(3) Few social enterprises (as opposed to umbrella groups, intermediaries & consultants) are currently keen enough on social investment to attend a conference like Good Deals 2013, despite the fact that Day One was free to attend. Out of 529 attendees to the conference, just 227 (42%) on the attendance list described themselves as ‘social enterprises & charities’. More worryingly, a narrow majority of those 227 were either consultants (in social investment, social enterprise/business support or impact measurement), funders or students, or were at the conference as speakers. Just 112 listed attendees (21%) were representatives of social enterprises or charities primarily engaged in ‘frontline delivery’* not at the conference as invited speakers. This is not, in any way, a criticism of the conference organisers – I would imagine it’s a significant increase on previous years – but it does illustrate the limit resonance of social investment in the social sectors.
(4) The social enterprise definition debate is now a far bigger issue for social investment types than it is for social enterprises – the Good Deals session ‘Defining The Brave New World’, chaired by James Perry of Panahpur, reflected the growing clamour in the social investment world for a redefinition/legal definition/single definition (delete according to standpoint) of social enterprise.
Big Social Capital’s chief executive, Nick O’Donohoe, recently called for a social enterprise definition: “driven by a specific legal form or golden share which guarantees a lock on social mission and also allows capital providers to earn a reasonable return consistent with the risks they are taking.“
In the session, Social Enterprise UK (SEUK)’s Nick Temple pointed out that social enterprise already has a definition and that while there may be a need for an effective regulator, it wasn’t clear why another definition was needed.
Katie Jones, of Clearly So, noted that structure is no guarantee that an organisation will deliver on its social mission while David Porter, ceo of Apposite Capital, seemed frustrated that everyone couldn’t just accept that it was “All about the social impact“.
A ‘stand-up if you agree’ vote suggested that roughly 80% of those in attendance opposed the idea that an organisation needed to have an asset lock to be a social enterprise. While the implication was that those present felt the asset lock was one of many problems with social enterprise structures that are deterring social investment, this seemed slightly strange when you consider that neither the existing definition of a social enterprise provided by the government nor SEUK’s social membership criteria actually demand an asset lock with SEUK specifically avoiding making it a condition of becoming a social enterprise member: “We believe there are many cases when [an asset lock] is desirable. However, we recognise that there are some cases where it is not required.“
(5) Apparently there’s this new idea called a Social Impact Bond. Has anyone else heard of them? It was possible to attend Good Deals 2013 and not listen to anyone talking about Social Impact Bonds (SIBs) but only if you arrived late, left early and went out sightseeing for a lot of the time in-between. The extensive coverage devoted to SIBs included an opening session consisting of three interviews with ‘charity leaders and investors involved in the first wave of social impact bonds to discuss why it was the right solution, hurdles they have had to overcome and how they made it happen‘ but there wasn’t much discussion of questions about the model’s wider application or any mention (at least, that I heard) of the failure (so far) to attract retail investors.
Many of us genuinely find SIBs quite exciting – they’re a strand of social investment that’s genuinely different to what’s provided by mainstream finance – and I’ve personally gone so far as to write a feature devoted to the Australian version. On the other hand, there’s clear a danger that the social investment sector as a whole spends too much time trumpeting a valuable niche intervention – there are currently 13 SIBs in operation in the UK, 10 operating as part of a single DWP scheme - as a displacement activity for its failure to meet the wider needs of the social sectors.
All in all another good year for Good Deals and, while the social investment sector hasn’t yet gone far enough in toning down the hype and demonstrating its practical relevance, there was enough thoughtfulness and humility on show to suggest it may be moving in the right direction.
*’Frontline delivery’ in this instance is activity that directly meets social needs (whether funded via trading or grants and donation). I’m not making this distinction to make a value judgment against funders, consultants or others who provide support services but to illustrate the (relatively) small number of attendees who are potential new recipients of social investment.