Big Society Capital – playing the long game
I still have a paper written in 1999 by Iain Tuckett from Coin Street Community Builders, where he argued for a £500m national investment vehicle for community enterprise.
“The national intermediary would not itself become involved in small-scale loans but would lend on to regional and local intermediaries,” wrote Iain. “These more local intermediaries would also specialise in the third sector and thereby tailor their products more closely to that particular market in their locality.”
Well, it took thirteen years, but finally Big Society Capital was launched earlier this month. In many respects, yes, it does represent the fulfillment of Iain’s vision. Big Society Capital will have £600m, of which £400m will come from dormant accounts and the remainder will be commercial bank finance. It will lend money to intermediaries, such as the Social Investment Business or the Key Fund in Yorkshire, which will then be able to make investments in front-line organisations, including we hope the members of Locality.
This could be a big opportunity to capitalise our sector, and drive forward growth. But, in practice, will it really live up to expectations? I have some questions:
Will the finance help or hinder small or medium community-based organisations? There is little doubt that high levels of debt, with punitive interest rates, would be a disaster for our movement, operating as it does in marginal economies. The learning of the last decade is that individualised and responsible funding packages, combining loan and grant and equity-style finance, are much more likely to nurture resilient and high impact organisations.
Will there be enough support to help organisations travel the journey, to reach the point where they have capability to use new types of finance? £10m has been made available for an Investment and Contract Readiness Fund so that’s a good start, but only a small start. The need is probably ten times greater, and must not be focused solely on the big players.
Will this new finance reduce or increase dependency on the State? The intention is that a great deal of Big Society Capital investment will be for organisations wanting to play a bigger role in public service delivery. But given the hugely uncertain state of public sector procurement, especially at a time of spending cuts, that’s an investment proposition fraught with risk.
Finally, will this finance end up distorting the very nature of social enterprise? Certainly, if Big Society Capital seeks too high a rate of return to appease its private backers, it will struggle to generate sufficient deal-flow. The temptation then will be to direct the funds towards for-private-profit enterprises, and justify this mission-drift by asserting these are ‘social businesses’ because, for example, they operate in deprived areas.
This last concern is perhaps the biggest risk it seems to me – a subtle, or not so subtle, erosion of our values and vision.
I am pleased that David Robinson from Locality member Community Links was appointed to sit on the oversight body Big Society Trust, and that Hugh Rolo, Director of Innovation at Locality, was also appointed to serve on the Advisory Board. They are, it seems to me, the guardians of the flame first ignited by Iain Tuckett all those years ago.
It has taken far too long to get to this point, and it feels that this is still just the beginning, but that just goes to show, that as well as tackling the immediate challenges (and goodness knows there are plenty of those for our movement), sometimes we also need to play the long game.