At the starting line…

Imagine the following social enterprises:

A)     A group of patient hotels, built alongside hospitals to give patients some recovery time before returning home. New mothers can stay with their families, getting used to breast feeding and acclimatising to the arrival of a new life. Worried parents can stay near their children – in for an operation. The NHS saves money by freeing up beds, and having a single place to go for health visitors and community nurses doing their rounds. The patient and their family have a better experience, staying in an affordable, well-managed, customer driven hotel.

B)      A social enterprise that develops new technology for improved learning in primary schools. Building on the initial development it successfully markets it to schools, children and parents enabling it to be used in 75% of schools within five years.

C)      A large scale prime contractor, making a significant contribution to getting three million people back to work as the economy improves. It integrates the efforts of charities and social enterprises to deliver government contracts on a payment by results basis, and is able to compete effectively with the private sector. Its social focus and understanding do not make it an undemanding client, far from it. But its focus is on ensuring that the charities it works with are sustainable and that it uses integrated case management data to constantly improve results for its service users.

At the moment, unfortunately, all of these are next to impossible to make happen. Funding for social enterprises is simply not available to start projects at scale, take them to scale, or in areas that aren’t fashionable or relatively easy to understand. For the first time, with the launch of Big Society Capital, this can change.

It all started for me with a call while I was on holiday, half way up a mountainside on a Greek island in 2005. Would I be willing to work as the secretariat to a Commission on Unclaimed Assets, set up to work out what could usefully be done with money that had got lost in the banking system? It will take six months and is going to be chaired by Sir Ronald Cohen…

18 months later in March 2007, our report “The Social Investment Bank, Its organisation and role in driving development of the third sector” described an engine to bring new investment into the social economy. During that time I had the opportunity to meet many leading social entrepreneurs, charity leaders and activists, learning of the exciting and important work that they were doing, and the potential they had to make a difference.

But despite all our efforts, the UK faces a number of familiar social and economic challenges

  • Better supporting those with complex needs/multiple problems – who have experienced little improvement in wellbeing during the long boom
  • Youth and long term unemployment – that threatens to leave us with a ‘social debt’ which exceeds even our current financial debt
  • Ageing population – with more than half of government expenditure likely to be directed to the over 65s within the next few years (>20% GDP)
  • Stubbornly high economic inequality and social fragmentation – that undermines individual wellbeing and the collective capacity to address common problems such as the need to shift to a low carbon economy

Each of these needs investment and innovation to make a real difference. This is the opportunity that Big Society Capital represents.

As part of its response to these complex challenges government has its own agenda for change for social organisations and enterprises. This includes mutualisation, personalised budgets, payment by results and transfer of assets to communities. All these create opportunities and challenges. All require investment.

Over the last decade we have been feeling our way towards a new more mixed social economy, less reliant on monolithic state provision, with a mix of social enterprise, charity and private sector provision. In addition we need more and better services to those in poorer communities, better fitting their needs and without charging more to those who have least. Without Big Society Capital it is hard to see how such new models can gain the investment and traction they need to become mainstream.

Big Society Capital is however just the start. We know there are individuals and organisations with the capacity and interest to make a real difference to our society. We can also see investors who would like to invest in our society, looking to achieve a measure of both social and financial return. But the gap between the two is still very wide and the infrastructure of intermediaries, funds and advisers is still nascent.

It will take a while for this infrastructure to catch up, and for potential social entrepreneurs to start to see the opportunities, but at last we have the potential to create over time a vibrant innovative, high impact social economy.

Because the infrastructure on which it sits is still emerging, Big Society Capital needs wider support. It needs the support of grant makers and early social investors to build up some of these elements and to co-invest. It needs the community around it to now shoulder more responsibility, not less because it has arrived.

It also needs people to be patient. To quote Bill Gates “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” Investing fast almost invariably means investing badly. Yes it has been a long time coming. But now it has arrived BSC needs time to do its job.

Finally from me a thank you to Matthew Pike – for calling me that day in Greece, and for his temporal optimism, which persuaded me to join the social investment community. I hope that those in the social investment community, and across the Big Society Network, will join that optimism and support Big Society Capital as it stands at the starting line for what is a long road ahead.

By Toby Eccles, Development Director at Social Finance

This blog was originally written for The Big Society Network

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