In the Spotlight: Structuring Social Investment

A hot topic right now in social finance centres on the development of a social investment wholesale bank. Is this the holy grail for the sector’s future?

In the last few weeks Office of the Third Sector’s social enterprise team visited the Eastside offices in Hackney to learn more about our work and gauge our views on how you might structure this bank. This tied in with a public consultation on the topic.

The OTS visit triggered conversation among the team and we had soon figured out that we wanted to answer a different question (we’re a bit like that!). For us it was less about structure and more about need. If government is going to invest £250+ millions from unclaimed assets into social enterprise where can it have the greatest impact? Is it into a wholesale bank, or is it elsewhere?

Bear in mind there are already funders with capital who are investing directly in social businesses (e.g. The Social Investment Business, Big Issue Invest, Charity Bank and others) as well as traditional grant bodies (e.g. Capacitybuilders, Esmee Fairburn). In fact the social capital marketplace is one of the few places where credit is still quite readily available.

At Eastside, our work is focused on the demand-side, on ensuring that there are enough social enterprises that are sufficiently robust and ready for growth.

We agree, of course, that capital being available is a good thing but capital alone is not the answer. Scaling the social enterprise sector is not just about the supply-side. We believe that you need a balance of public investment into both sides – the supply and demand.

To this end, we advocate to see greater levels of investment into infrastructure and institutions to fund the training, education, support services that social enterprises need to grow.

And the neat thing here is that the supply side will benefit too. Social investment as an industry will benefit and become more sustainable because there will be more opportunities for social funders to make good deals, to grow social enterprise and therefore to see their capital get recycled.