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A social investor or a friend?

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This year marks 15 years since I started work in the voluntary and community sector.

It was in 2001 that I gave up my commercial career to set up a community cafe in West Swansea, Wales with the aim of supporting young people to gain skills education and a new hope and future.

Over the time I've been involved in this sector, the way in which it is perceived and in particular the way it is funded has changed dramatically.

When I started most funding was expected to come through fundraising, donations and grants. So, much of my time as CEO was spent promoting my organisation to build relationships and influence those who might be willing to give anything from £5 to £50 a month. This was supported by newsletters, flyers and leaflets sent around with stories of lives transformed and proposed developments in the service.

The introduction of the European Social Fund (ESF) changed things for charity CEO’s. The ESF investment required us to project years in advance what numbers of young people we were going to engage with, their demographic and social backgrounds and what impact and outcomes we were going to have. During this time there was an ongoing tension between doing what you were commissioned to do versus what you felt was important as a charity. ESF funding required the CEO to spend time ensuring there was good data gathering and report writing. These reports were often required to repackage donation based programmes and demonstrate why objectives set years ago were either missed or exceeded. At the same time effort was put into understanding full cost recovery and how a charity’s core costs could be covered.

More recently we have seen a shift into innovation and social investment funding of the third sector. This chapter in my experience has sought to combine the commissioning principle of more recent years with the philanthropy of old. For me, social investment is where people who are inspired by good, seek to invest in those who have innovative ideas and are doing good.  To do so they require strong, robust business models that are properly costed, evidence-based and impact driven. In such a climate the third sector CEO is required to both be able to produce high-quality reports based on excellent evidence but at the same time build strong relationships and influence with those who are minded to invest.

This new chapter in third sector funding presents new challenges, which must be properly considered. Social investment is a great opportunity for innovative schemes tackling significant social problems to expand - however it must do so at a cost that is fair to the charity or enterprise being supported. Social investment must be a two way friendship where the recipient of the funding is feeling more than just the financial benefits of the investment. It is not enough for a social investor to cover themselves in glory because they have invested in a good cause, if the cost of that investment is too high for the charity or enterprise. Rather social investment needs to be done in such a way that the costs and benefits suit both parties whether that is time, finance or risk. At the YMCA I have been guilty at times of treating our social investors as financial partners rather than friends - the same as any high street lender. Whilst we met our obligations under the social investment framework we hadn’t got to know each other and made the most of each other’s advice and support. Several years on, I hope I’m now getting that balance right.

In this new chapter in third sector funding there will inevitably be successes and failures, however as long as both parties remain focused on the shared desire to bring about social transformation then the whole community will benefit.

 

Last updated | 
5 October 2016

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