Social finance and social investment: helping communities down through the ages and during Covid-19
The concepts of social finance and social investment are seen as new, but in fact are one of the oldest form of philanthropy. Take Thomas Firmin’s response to unemployment and destitution following the Great Fire of London in 1666 and the origins of the Building Societies in the 1840s. They both use investment tools to create a social as well as a financial return.
The modern application, however, is not always as straightforward. Especially when we consider investing in charitable organisations and social enterprises that may have very different legal and governance structures, as well as motivations from more commercial businesses.
A new book from the Business School (formerly Cass), authored by Mark Salway, previously Director of Sustainable Finance, with chapters by Gamil de Chadarevian (Founder and Director of GIST) and Megan Taylor (Director at RISE Beyond, a global consultancy platform) seek to demystify social finance and social investment. The reader is helped to understand this from different angles: introducing social investment, discussing social investment and taking a “deep-dive” into it to bring it to life. This unique book takes the reader on a journey from first principles to detailed practical application.
The book will help readers to understand how a small amount of borrowing, or a different business model focused away from grants and donations, could be transformational for the non-profit sector.
The book also examines the policy context and asks why social investment has only recently become so popular, when in reality this is a very old concept. This is linked to the agenda of making charities more “business-like”, set against the changing face of non-profit business models, as charities can no longer rely on donations and grants as guaranteed income.
Social investment is opening up new opportunities
As quickly as problems are being encountered with social finance and social investment, so too are opportunities embraced. This is even more important in the time of Covid-19.
This reflects an increasing interest in going beyond the ethical into environmental, social and governance (ESG) and socially responsible investment. Equally, crowdfunding and a focus on community provision have not been wasted efforts; innovation in areas such as social prescribing and local support networks has become established during Covid-19, showing future promise. All are underpinned by social investment.
The first indications are that returns on both social and financial investment have exceeded expectations.
In 2021, we will see fascinating opportunities emerging. Social investment funds are building up strategic partnerships with charity and social enterprise providers, enabling funding to be better focused on impact. We also see pension funds, larger investment funds and local authority pension schemes becoming more interested in this space and making their first investments. This is an exciting time.
The corporate venturing market is also developing, with private sector corporates looking beyond investing in pure innovation and instead re-purposing existing investment models to enable mission-aligned social and environmental change.
“Demystifying social finance and social investment”, Salway (2021), Routledge, is available now for purchase from Routledge or Amazon.