‘Disappointing’ and ‘not reasonable’: Social Enterprise UK calls for Big Society Capital rethink | The Social Enterprise Magazine

Significant changes at the UK’s Big Society Capital announced on Friday have been broadly welcomed – but Social Enterprise UK criticized the social investment wholesaler for not putting “social enterprises at the heart of its mission”.

In a statement Peter Holbrook, CEO of Social Enterprise UKdescribed the move to cut the target return rate as a “big win” for the Adebowale Commission on Social Investment, which called in January for an “urgent” course correction in the social investment market.

In an exclusive piece published last Friday, Big Society Capital CEO Stephen Muers set out planned changes, including a cut to the organization’s overall target rate of return to 1%. Muers emphasized that this would “not lead to significant changes in the cost of capital nor reduce the need for long-term subsidy for parts of the market”.

However, Holbrook (pictured above, right) suggested that some may be expecting to see changes. “[Big Society Capital’s target rate of return] has been raised over many years as part of the reason that our cost of capital is expensive relative to other businesses… We hope the benefits from this change will be passed down to social enterprises in lower-cost finance. “

We hope the benefits from this change will be passed down to social enterprises in lower-cost finance

Muers’ piece defends BSC’s “wider mission”, which goes beyond supporting only social enterprises and trading charities. In response, Holbrook said it was “disappointing” that BSC had “chosen not to accept the Commission’s recommendation to put social enterprises at the heart of its mission”.

“They are right to say that they only have limited funds to make a difference, but this is even more of a reason to target helping social enterprises to grow rather than spending their resources thinly,” said Holbrook.

“Not reasonable”

Chair of Social Enterprise UK Lord Victor Adebowale (pictured above, left), who oversaw the Commission on Social Investment, said he hoped that the reduced target rate of return would be “part of a wider cultural change” within Big Society Capital.

He was more outspoken on the issue of a proposed Black-led social investment fund – which Muers said Big Society Capital would support but, as it was not a grant-maker, could not provide with core operating funding. Muers added, however, that BSC “would be very interested” to explore providing appropriate investment capital alongside others in the future.

It is not reasonable, in my view, for Big Society Capital to pass responsibility onto the National Lottery

“Big Society Capital has the resources to provide a long-term equity investment into such an intermediary and support the development of such a fund,” said Lord Adebowale.

“It is not reasonable, in my view, for Big Society Capital to pass responsibility onto the National Lottery when hundreds of millions of taxpayers’ money has already been given to Big Society Capital to grow the social investment market. I hope that Big Society Capital will reconsider this decision. ”

“Listening and acting”

Other commentators shared their views on social media – raising some questions but largely positive about the changes.

Ged Devlin, development manager at social investor Key Fund, tweeted: “Lots and lots of questions here I’m sure. But have to say it really should be welcomed that the team are listening and acting. “

Bayile Adeoti, a social entrepreneur based in Scotland, highlighted BSC’s support for a Black-led social investment intermediary and commented on LinkedIn: “This article has encouraged me! Look forward to reading about the further developments. “

Responsible Finance – which represents dozens of UK Community Development Finance Institutions – commented that the changes would be “good news for CDFIs”.

Paul Streets, CEO of Lloyds Bank Foundation of England and Wales, was more cautious, tweeting: “The change in RoI is welcome. But one of the big questions will be can BSC get transaction costs down to a level that meets a market need for lots of small scale investment – which reflects the fact 95% of charities are sub £ 1m. “

Top image: Lord Victor Adebowale and Peter Holbrook, pictured in 2016 (credit: Social Enterprise UK)

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