What does Brexit mean for social investors like BSC – and how might it change what we do?
A consistent theme has emerged from our discussions in the month since the Brexit vote. And that is uncertainty. Investors don’t usually like uncertainty – it makes it harder to plan ahead and it makes it more difficult to assess risk. This often drives capital towards safer options.
Uncertainty may have other effects. Charities and social enterprises may put off plans to take on social investment until the future seems more predictable. Or there could be delays to policy initiatives or local commissioning decisions that we expect to lead to demand for social investment. And if there is a recession, social investors won’t be immune to the consequences of falling house prices and rising unemployment – we might see an uptick in losses in investment portfolios.
But we believe social investors should respond differently to uncertainty than most investors. The starting point is continuing to prioritise the social impact of all of our investment decisions and adapting our investment approach with the changing needs and environment for charities and social enterprises.
As we have been absorbing the developments of this past month, our focus has been on where and how our capital might have a role to play in bridging immediate gaps (for example, if other investors are harder to find). Over the longer term we remain committed to supporting solutions to the persistent problems such as employment and housing for more vulnerable people – while recognising that will take time to develop and scale.
In fact, investments made in times of uncertainty can often perform better, as all parties are more realistic about the future. All this means social investors should be ready to respond to uncertainty by taking more risk, not less.
The social investment sector grows stronger and more diverse, with the resilience and capabilities to cope with evolving circumstances. Even more importantly, social investors work with those people, communities and organisations who are trying to address the social inequalities and fragmentation that the vote has thrown into stark relief.