Initiatives
Big Society Capital (BSC)

Our strategy for the next three years

Burgess COMMENTARY

Peter Burgess

Our strategy for the next three years We’ve just published a strategy for Big Society Capital to guide our next few years. It sets out a vision for the future social investment market, and what we can do as a champion and investor to work towards this vision.

Does this mean Big Society Capital hasn’t had a strategy in our first two years?

Our first year was largely reactive. When we were first launched in 2012, we were inundated with proposals to fund different types of intermediaries. Our priority was to respond to these, at the same time as setting-up a new organisation – hiring good people, working out how the computers plug-in etc.

In our second year, we were able to target four or five strategic priorities, and as our 2013 Annual Report shows we made pretty good progress against these. There is much more unsecured lending available to charities and social enterprises. There is now more regionally-focused capital, in the North-East of England and in Scotland. There is a mass retail social investment product you can put in your ISA. We made a £10m investment into the Community Investment Fund to help channel capital towards community organisations. We didn’t support the creation of an additional fund focused on Social Impact Bonds, as we said we would at the time, but the SIB market as whole developed significantly in 2013.

Still, as we looked forward to our third, fourth and fifth years, we felt we should have a more detailed answer to the question: “What sort of market are you trying to build?” So over the past several months, we have posed this question to many different stakeholders, our three Boards and our staff, and attempted to distil what we heard.

One (perhaps obvious) finding is that social investment is diverse and means many things to many people. Another is that social investment is complex - there are many potential combinations of social issues, organisations, investment products, intermediaries, and investors, some of which combine more effectively than others. For instance, funding highly innovative, risky and targeted interventions might be most attractive to mission-driven investors via specialised outcome funds. Meanwhile, community projects might be best supported by local investors via low-cost channels like peer-to-peer platforms. And areas that require large amounts of capital (social housing, social services that require specialist accommodation units) may ultimately need recourse to public markets.

How do you handle this complexity whilst respecting the diversity of social investment?

We think the answer lies in a future social investment market that generates social impact across the UK by: Improving access to finance for small and medium sized charities and social enterprises

• Helping the most innovative approaches to tackling social problems grow and replicate

• Building mass participation in social investment

• Bringing far greater scale in the financing of social issues

This vision of the future social investment market is at the heart of the strategy we’ve published today. The strategy goes on to describe what we plan to do to support each of the four components outlined above, as both a champion and investor (and sometimes the list of things we can do as a champion is longer). It also discusses some of the ways of working that we will need to adopt over the next few years. These include an ongoing shift to partnering with other organisations and investors, particularly to co-create investment opportunities that might be at early stages of development. We also want to cement a ‘social issue-based approach’ within Big Society Capital to deepen our understanding of social need, effective interventions and business models, and make sure we’re ultimately supporting social investment to lead to greater social impact.

We hope this vision and strategy is useful for others to see. It certainly won’t be something we can achieve alone and it certainly won’t be fixed. So we’d welcome views and suggestions for how we can work with others, and how it can be improved. Please get in touch.

By Matt Robinson, Head of Strategy and Market Development & Travis Hollingsworth, Strategy and Market Development Director