Charity Trustees and Social Enterprise Non-Executive Directors – how are they getting on Board with social investment? | Big Society Capital

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Charity Trustees and Social Enterprise Non-Executive Directors – how are they getting on Board with social investment?

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“Social investment is a great way to raise funds, increase impact and increase awareness of the charity’s work. As a sector, why aren’t we just getting on and doing it!”

This was the view of one Trustee from a charity that has successfully used social investment – but is probably not a view that is widely shared. Limited awareness and low risk appetite at Board level to consider using repayable finance are the common themes that we hear.

We know that social investment can bring opportunities to enable charities and social enterprises to grow, develop new services and form new partnerships to increase their impact. But we’re also aware that social investment can present challenges for Boards. They have to balance their roles in driving their organisations to increase their impact on the one hand as well as managing risks around taking on repayable finance, and also get to grips with new funding models in the process.

Over the last year, we’ve spent more time understanding the Trustee perspective of charities who have used investment – in order to share their experiences more broadly, so that other charity and social enterprise Boards, where relevant, can consider whether this is the right thing for their organisation.

There are some common themes from these discussions – with large and small organisations alike:

  • Shared ambition between the Board and management team to grow their impact
  • Getting the right mix of skills and experience on the Board in the first place is key
  • Balancing the tensions often inherent in Board role in embracing risk & new opportunities to help deliver the social mission against asking the right questions and protecting the organisations’ assets
  • Key ingredient for success is the underlying trust between Executive and Board 

These themes are set out in more detail in this Governance and Social Investment paper, and we’re really grateful to have thoughtful contributions from a range of relevant perspectives on what’s needed from governance when considering social investment - the Charity Commission, a founding trustee of the Association of Chairs, Trustees Unlimited, a social investor and a charity chair that has used investment.

Also included are several case studies from a round table and individual conversations I’ve had with a number of trustees and directors, highlighting the diversity of organisations using social investment and giving interesting insights into the governance considerations.

There’s been a great deal of debate around the role of social investment in the future funding mix for the voluntary sector, and the barriers around it’s take up. However charity trustees have largely not been involved in this discussion.

So we also asked these experienced Trustees what they thought needs to improve if social investment is to be more effectively used in the sector. Many comments centred around strengthening governance in general – which we’re unlikely to directly address. However we’re excited about how our upcoming GET INFORMED campaign could help tackle some of the needs they’ve raised, particularly about knowledge and understanding of the risks and opportunities around social investment at Board level.

An organisation that has a strong Board which arewell informed about the range of funding options available to them should be better placed to make decisions about how it funds long term delivery of impact. Social investment may well be part of the solution for many more organisations as a result. We’re looking forward to working with charities, social enterprises, their Trustees & Non-Executive Directors and organisations working to support stronger governance in the sector to enable more of the opportunities around social investment for the sector to be realised. 

 In September 2016, Big Society Capital will be launching the GET INFORMED campaign in partnership with a number of organisations supporting Trustees and Directors to help board members of charities and social enterprises understand the risks and opportunities of social investment. 

Last updated | 
7 July 2016


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