Social Investment Action Zones ‘could transform our approach to social problems’, says charities leader
Published: Wednesday 22 October 2014 - 09:00
ACEVO’s Sir Stephen Bubb calls on political parties to commit to new Social Investment Action Zones in their election manifestos.
A report published today by the Association of Chief Executives of Voluntary Organisations (ACEVO) and Sobus (the CVS body in Hammersmith & Fulham) sets out a pioneering new model to improve access to social investment that it says could have transformative effects across Britain.
‘Social Investment: The Local Opportunity’ is launched in Fulham during Good Money Week after long-term research in the ‘tri-borough’ area of West Central London (Hammersmith & Fulham, Kensington & Chelsea and Westminster), which is proposed as the pilot area for this new initiative.
The report documents widespread scepticism and reticence among charities about using social investment on the ground, despite concerted efforts on the part of the Coalition Government to make the UK a world-leader in social investment.
It finds the main barriers to the use of social investment are:
- A lack of knowledge on the part of local organisations about social investment. This extends to second-tier organisations like CVSs that front-line organisations tend to rely on for much of their support and information.
- The perceived complexity of social investment – 47% of respondents to ACEVO’s 2014 Social Sector Tracker said their trustees would be ‘unlikely’ or would ‘never’ consider social investment. When asked if they had ever taken on a load, only 23.6% of respondents said they had.
- The lack of capacity of local organisations to engage with social investment.
- The lack of local ‘meeting places’ within which potential investors and potential investees can discuss combined approaches to tackling needs, and how social investment might facilitate such approaches.
- A lack of accessible social investment product. Currently “the vast majority of social finance currently invested takes the form of asset-backed deals and loans that are otherwise too restrictive, or large to be of value to all but a small minority of organisations.”
The findings echo recent reports of NESTA’s £17.6 million Impact Investments fund having funded no charities since its launch in November 2012, and having received little interest from the charity sector.
The report argues many places around Britain could benefit from the creation of ‘social investment action zones,’ which it argues are crucial to the next stage of development of the social investment marketplace. It highlights the fact that current policy responses fail to get to grips with the underlying causes of need in disadvantaged localities, and suggests that the techniques of social investment are valuable in planning a co-ordinated response to deep-rooted needs that requires a long-term, multi-agency response.
- Establishing ‘social investment action zones’ to drive social investment in localities, defines as places “where concerted exploration of the potential of social investment to support charities working to address local need makes sense, and where there is sufficient potential demand for national and local social investment intermediaries to regard these areas as ‘local investment markets’. These action zones would bring together local councils, local charities and local social investors to drive change in these areas.
- Piloting the first social investment action zone in the tri-borough area.
- That wider exploration of local social investment markets is led by local need, not by an investment agenda.
- Better support for local infrastructure organisations on how and where to access social investment, and how to become investment ready.
- Creating more accessible, simple loan products for small social organisations to take on social investment – since there is not enough small-scale capital currently available, for loans where investors may have to take on greater risk.
- Engaging local stakeholders to explore complex needs and the possibility to tackle them with social investment.
The report was produced by the ‘Local Opportunity’ Commission on Social Investment, established in January 2014 by ACEVO and Sobus and chaired by John Kingston, former director of CAF Venturesome social investment fund. Commissioners include social investors and representatives from the voluntary sector, local government and national government.
Commenting on the report launch, Asheem Singh, Director of Public Policy at ACEVO said:
“Social investment remains arcane and impenetrable to many – including many of the charities and social enterprises it is supposed to help. We in the UK are world leaders in this space, but perhaps it is time to look closer to home.
“Social investment action zones that bring councils, charities and investors together are the next level of development. The Tri-borough area is a pioneer. This is about getting a new stream of funding to solve social problems on the ground, that’s more in touch with the needs of local communities. The work of this commission has been to bring a new model to market and it’s time for Westminster and Whitehall to support it.”
Sir Stephen Bubb, Chief Executive of ACEVO said:
“Social Investment Action Zones could transform our approach to social problems, by starting with local social need and building policy out from there. The political parties should show their dedication to social renewal by committing to push for Social Investment Action Zones in their election manifestos.
“There’s a worrying trend of social organisations not having enough information to be able to access social investment, even when it might transform their beneficiaries’ lives. Politicians must back ACEVO’s plan to grasp the local opportunity and make social investment even more relevant to the whole of the third sector.”
For media enquiries please contact George Bangham: 07825 894716 or firstname.lastname@example.org.
Read the full report here:
NOTES TO EDITORS
To follow through on the Local Opportunity Commission’s work, a taskforce will be convened to oversee the agenda set out in this report. The taskforce will:
1) Work to improve local knowledge of social investment. ACEVO has committed to run two workshops in the Tri-borough before March 2015.
2) Work to create a ‘Tri-borough’ focussed fund, particularly focussing on simple loan products.
3) Explore tackling a particular need, and the role of an investment approach and also how resources might be raised from businesses, high net worth individuals, foundations and others in developing a long-term solution.
4) Explore the use of a technological platform to facilitate the matchmaking of prospective philanthropists and social investors with locally developed solutions.
The taskforce will report back to the Local Opportunity Commission in March 2015 with outcomes from its work.
More information about ACEVO’s Social Sector Tracker is available here.