Big Society Capital (BSC)

Kia ora koutou. 

Many in New Zealand’s philanthropic sector will have met Big Society Capital (BSC) director, David Carrington, on his visits to New Zealand. Today I met with David, and Marcus Hulme, BSC Social Impact Director. BSC is an independent financial institution, which invests purely in Social Investment Finance Intermediaries. BSC was set up to help grow the social investment market and is funded by English dormant bank accounts and an equity investment from UK retail banks. 

Key areas of discussion

What are they learning?

It is important to have a mix of funds available to support the ecosystem of social enterprise and social impact businesses that are ready for social investment.

The ability to invest in capacity development, impact readiness and blended models of both grants and social investment (loans) can maximise the potential return and impact.

BSC have a core focus on building practice, learning and having an open source approach to sharing experience and tools which enables others to engage in social investment. This makes for more efficient and effective use of the investments. 

The movement away from individualised models to tiered support and new ‘impact measurement system’ will enable extension of the high level framework to develop more tailored tools, draw down support, and grants for individual or collective development of impact measurement. This may include a requirement for shared published outcomes and learning.

A mix of funds which include a focus on ‘issues’ as well as open focus supports both funder-led and community-led initiatives.
In the UK there is a large eco-system around social investment which is adapting and learning all the time.

As this market is relatively new there are challenges with workforce development. Advisors come from many professions and growth of the sector has meant growth in the workforce although it’s not a traditional path for those who come to it from investment banking or evaluation or professional advisory services.

Investment in ‘readiness’ is an important and evolving aspect of social investment.

The UK now has a track record in social impact bonds (SIBs) which are demonstrating some success. One key learning is for them to be successful, the cost of development to enable a return must be cost effective in relation to the bond / investment. It’s not the right model for every organisation.

What are their emergent practice observations?

Borrowing learning from grantmaking for social investment is a useful approach

Layered investment models offer better options to the eco-system of social businesses.

Impact measurement also needs layers - from end user outcomes through organisational development and change to funder experiences

Shared learning and open source tools are an important aspect of the developing sector

Peer support for learning could be a useful development
Blended funding meets a wider range of organisational needs for impact

What’s on the five to ten year horizon?

Post BREXIT there is a potential vacuum for policy which could create an opportunity for social investors to influence for more innovative approaches.

Increased collaboration and collective impact models across investors / funders could mean greater impact. A new initiative to tackle poverty in the UK, for example, between BSC and the Joseph Rowntree Foundation, incorporates grants and social investment.

Creation of a new ‘retail market’ for social investment. The question is how can the general population get involved in investment for social good?

New social investment technology platforms.

What are the wild cards?

The realities of the post-BREXIT environment are unclear and will remain so for a few years leading to economic, market and policy uncertainties.

Insights and learnings

New Zealand could, with the right advice and investment in creating an eco-system, look to social investment models which would add another aspect to investing for social impact. We need to take time, however, to look at lessons learnt in the UK and elsewhere, and realise this is not a quick fix. We would need to invest properly in infrastructure to build capacity and capability for effective practice to develop and be implemented over the long term.