Is Big Society Capital more focussed on financial than social returns, The Guardian asks today.
In Northern Ireland however, The Social Investment Fund (SIF) has been set up to deliver social change. It therefore aims to make life better for people living in targeted areas by reducing poverty, unemployment and physical deterioration. The fund will run until 2015 and has been allocated £80 million by the Northern Ireland Executive.
A key feature of this approach is how it will work with communities.
‘The fund is being delivered in partnership with communities across nine social investment zones. Each zone will have a steering group with up to 14 members from the business, political, statutory and voluntary and community sectors. They will develop and manage plans for each of the social investment zones.’
In this regard, with its focus on poverty, it is very much aligned with what was proposed 6 years ago in our strategy plan for microeconomic development and social enterprise in Eastern Europe, where we said:
‘Project funding should be placed as a social-benefit fund under oversight of an independent board of directors, particularly including representatives from grassroots level Ukraine citizens action groups, networks, and human rights leaders.’
As the pioneering work in Russia had demonstrated between 1999 and 2004, turning the former approach to economic development on its head, it was possible to make funding available to those who needed it most – those in poverty.
Most of these potential entrepreneurs were far from “investment ready” and it was the function of a one-stop shop for business education and support to change this.
This a highly successful strategy.became known as the Tomsk Regional Initiative. Among a population of 600,000 around 10,000 micro-enterprises were created by the time of this interview in 2004.
A similar bottom up approach had been proposed for the UK, in a strategy to create investment capital for CDFIs to seed social enterprise in local economies.
In 1998, Russia had been among those first affected by the worldwide crisis which was triggered by the unregulated OTC derivatives market.as PBS Frontline reports on the failure of LTCM. Everything learned from the Great Depression had been forgotten.
As David Mclintick reported in ‘How Harvard Lost Russia‘ the Russia Project had offered “an opportunity to preach the importance of integrity, transparency and fairness in shaping a business culture, and to work to enshrine those values in the country’s legal and financial infrastructure. Instead, their personal dealings sent a very different message”.
Today in England, Scotland and Wales we are persuaded that for social investment to be effective we must disregard this kind of openness and transparency in favour of social investment intermediaries These experts on investment readiness, we are told, will identify those social enterprise projects which have investment potential.
Unfortunately they don’t seem to have the ability to find them.
Two years ago, ‘Business Tsar’ Sir Alan Sugar whose personal wealth had been build on outsourcing production, blamed businesses themselves for the lack of investment capital saying:
“I would like to make it perfectly clear once and for all that the banks are there to do business and they will do business with anybody that has a justifiable business plan and the necessary assets to back it up,”
We along with other self sustaining social enterprises who reason the case for social investment in their business plan are being told by those who can offer no equivalent reasoning for their own insertion into the social economy, that we need to be helped toward investment readiness. A stance deserving the obvious diagnosis of ‘physician heal thyself”
In our case, clearly there’s a argument for doing what we proposed in Eastern Europe because USAID, the British Council, Erste Bank, and other partners are now participating in the project we invested in designing, albeit omitting the primary social objective and the transparent and democratic oversight I’ve described above, to such an extent that the description of social enterprise from their UK expert is published in Ukrainian.
The absence of transparency in social enterprise is underlined by the membership list for the All Party Parliamentary Group who might readily be mistaken for a Freemason’s lodge, from their apparent need for secrecy.
In David Floyd’s view, social enterprise practitioners who saw Big Society Capital as the means to stimulate a social investment market were ‘done up like a kipper’ but there is perhaps something more fundamental – lack of courage in the risk averse who may oversee the cash pile from bank accounts of the dead. There’s courage required of those who might dare to take on the social problems of Northern Ireland and Eastern Europe, as evidenced by our founder’s challenge of organised crime.
The greater lack is that of moral courage, which is exemplified by the guru of Big Society itself with his organisation’s support for a mogul whose greed many see as the root cause of social problems. As a relative newcomer to the advocacy for re-inventing capitalism, he , like the impact investors, has no qualms about regurgitating the work of others as if his own.
Keep social impact pioneers away from discussion, brush them and their would be beneficiaries under the carpet and leave them to die, is the message coming across loudest from government’s confused ethical stance on a ‘kinder capitalism’.