The Editors' Post: Radical ideas for a soul-searching social investment sector

Anna Patton 20th October 2023

From the Gathering for Social Investment, we hear calls for fresh approaches, an emphasis on redressing power imbalances – and a reminder to celebrate the wins, too. This week's view from the Pioneers Post newsroom.

Social investment isn’t accountable enough to the people it’s supposed to help, some say – but what if social investors’ pay rises were based on impact performance, not financial performance, and had to be approved by a group of social entrepreneurs?

Social businesses sometimes face closure, through no fault of their own – so what if we all paid a little into some kind of insurance or solidarity fund, which could jump in quickly when needed?

Social investors talk about the need for diversity and inclusion – but what if they started talking about justice and reparations?

These were some of the – possibly controversial – ideas raised at The Gathering for Social Investment, a two-day event hosted this week by Connect Fund with support from the Pioneers Post team, which aimed to explore gaps and identify solutions in UK social investment.

Those fresh ideas were a welcome antidote to the somewhat gloomy outlook that some expressed. There’s still far too much reliance on debt to grow, participants said; much more long-term, risk-taking capital is needed. Innovative financial products exist, it’s scaling them up that’s the issue, because more mainstream investors want to stick with tried-and-tested approaches. Intermediaries are stuck in a “risk sandwich” between their investees and their investors. Meanwhile social businesses, even those with strong business models, find themselves stuck in a catch-22, unable to secure the right combination of financing.

Power redistribution was a big, knotty theme this year – much more so than during the 2019 edition of the Gathering. Social investors needed to get out of the “ivory tower” speakers said, and to face “really uncomfortable questions”. One social entrepreneur told me she felt social investors were still mostly London-centric, but others highlighted more positive experiences, such as Impact Hub Bradford’s work to co-design an investment programme that genuinely responds to local needs, or the genuinely supportive, patient approach of investors like Sumerian.

Social investment insiders may be a bit too good at self-criticism, one former social business founder said – we also need to recognise the progress that’s been made. Working in this field can be “mind-bogglingly difficult”, said another speaker – so we should celebrate success stories like the “extraordinary” growth of social banks like Charity Bank or Unity Trust Bank. As the country heads towards a general election, the “increasingly compelling evidence” of what social investment can achieve is a strong basis for lobbying for better policies. And the arrival on the scene of the Pathway Fund, a first-of-its-kind wholesaler dedicated to racial equity, shows that all the talk on diversity and inclusion is turning into action. Next steps: exploring some of those radical ideas?