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Four views of social investment or the resolution of Travis' moment of despair

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“Yet across the gulf of space, minds that are to our minds as ours are to those of the beasts that perish, intellects vast and cool and unsympathetic, regarded this earth with envious eyes, and slowly and surely drew their plans against us.” 
― H.G. Wells, The War of the Worlds”

One of my self-criticisms was a failure to do the intellectual heavy lifting.  I simply got on with the job in front of me - responding to demand from the charities and social enterprises that needed social investment. 


I rarely paused to think about why we did what we did.  It seems fairly obvious.  Charities and social enterprises needed social investment, we were providing it.  If they did not want it, they would not ask for it and we could do something better with our time.  If they needed more than we could offer, we looked to collective solutions – funds, social banks, and other pools of money greater than ours in size and scale, and with specialised, skilled people hopefully able to make a better job of it that we could ourselves.  

If all this worked and was a good thing, well through the demonstration effect, others would be attracted to do the same and more.  

There were a few minor problems with this approach. It was not so immediately obvious to those outside of the social investment world why they should make social investments.  How does it fit with an asset allocation strategy, they might ask?  If I have to compare the effectiveness of my grant making with the effectiveness of a social investment approach, which would be more effective?  And if they are both effective, what should I allocate to each one?  And why?

I found my simple social sector approach of “just follow the demand” and being retrospectively strategic did not cut it with this new wave of investors. I could not but help think that they were right.  I ought to have a better way of understanding and communicating what social investment was.    

And then along came Venturesome, Big Issue Invest, Bridges Ventures, Social Finance and latterly, Big Society Capital.  Some rather brighter people than I started to think, analyse and set out what it was that we were doing in social investment.  I point you to CAF Venturesome’s comparison between the growth of the microfinance market and social investment, or Antony Ross from Bridges’ thoughts on social enterprise finance, or Nigel Kershaw’s vision of a modern day Venetian social merchant bank.    

Amongst these people is one Travis Hollingsworth.  Before my time at Big Society Capital, he worked with the team in pulling together the organisation's strategy.  All was coming together well until the moment when he thought he would ask people in the social investment sector what social investment was. This turned out to be his moment of darkest despair as he got 65 different answers back.  How on earth to make sense of this?  Here is an organisation, supposed to support the social investment movement in the UK, and it has to do 65 different things?   Being a rather excellent management consultant by background, rather than giving up at this point he tried the “put things in four boxes, and see what they look like” approach.  And it kind of worked.  These are the four boxes that emerged.

The first view was that social investment was about regular finance for charities and social enterprises.  They need money, social investment is about giving it to them.  

The second view was, oh not it is not.  The problems charities and social enterprises face are deep and persistent. We need to innovate in order to solve them, as the resources we have available are just not going to be big enough to solve the problems we have in front of us. Social investment is about funding innovation.  

The third view was, fine, but we have big problems and if these charities and social enterprises need finance, and have innovated to provide new and better services, they are going to need funds a scale to grow.  So social investment is about scale.  

The fourth view as that to do all of the above we have to have mass participation.  We have to engage ordinary people social investment.  Social investment is about connecting people directly with charities and social enterprises, through social bank accounts, community share issues and crowdfunding.  

So four views on what social investment is: for Charities and Social Enterprises, for Innovation, for Scale and for Participation. 

And that was the resolution of Travis Hollingsworth’s hour of deepest despair and that was the evolution of Big Society Capital’s strategy – to support social investment in these four areas.

As someone seeking a bit of intellectual heavy lifting, I found this rather helpful.  Instead of looking at a proposal and thinking that somehow, it had to do everything, social and enterprise finance, that involved retail investors that is really innovative, that goes to scale.  Actually, it could just be one of these things and perfectly reasonable to back.  If it ever gets confusing again, I can always turn to John Kingston’s advice to me many years ago.  What do the beneficiaries of charities and social enterprises need? Look to that as your guide star.

This blog is number five in a series of five looking at Understanding What Social Investment Is


Last updated | 
24 December 2014


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