Many charities and social enterprises are thinking about how social investment can play a role in their work. In a previous blog we looked at Social Impact Bonds, one of the more complex social investment models. Here we ask David Hounsell (Aleron and The Children’s Society) and Kirsten Naudé (The Children’s Society) to take a broader view of the challenges and opportunities social investment can bring, and share their first-hand experiences of the ups and downs along the way.
For many charities, social enterprises and commissioners, social investment is new, untested, and complicated. The changes required to obtain and use social investment can seem too great – and it is easy to slip into a ‘not right now’ mentality. However, it is a market that is growing at pace, and if embraced and understood can help the social sector learn, adapt, and ultimately improve the lives of society’s most vulnerable people.
Over the past two years we have gained experience on what social investment really means, both working within a national charity and advising other charities and commissioners who are tackling social investment for the first time.
A rapid learning curve
For organisations working with beneficiaries facing severe and multiple disadvantage, social investment can seem daunting. We have experienced the significant challenge of designing and using social investment mechanisms to tackle multiple issues across different cohorts and where outcomes affect a range of commissioner budgets, policy agendas, and provider networks.
Through the work of Aleron (which supports social purpose organisations to deliver impact and efficiency) , we have seen how aligning organisational mission, strategy, skills, capabilities, and actions can be challenging enough within single organisations, let alone across multiple organisations and across sectors.
Embrace the challenge
And yet it is adapting to this challenge which can potentially unlock social impact for the people who need it the most. We are all shaped by the systems around us and often the most vulnerable people are those for whom the support available works least effectively.
The Children’s Society supports tens of thousands of young people, most of whom face severe and multiple issues, and who regularly have come into contact with 10 or more separate agencies before they reach its services. In fulfilling its legal and moral obligation to protect, support, and advocate for children and young people, it faces inherent tensions between innovating and ensuring adequate safeguards are in place and duties upheld.
Finding solutions to this isn’t easy, but we know that real positive change in the social sector is always delivered through collaboration. It also involves taking risks and trying new things. Social investment can help to lock-in collaborative working; ensure that impact is the core objective and is measured; to drive strong performance; and create the long-term perspective needed across a network to bring about real change.
Social investment remains in the early testing stage and that is why initiatives such as Big Potential and the Life Chances Fund are welcome in building much needed capacity and capability in the sector. Independent research into the effects of social investment, such as the programme that is about to be conducted by the Centre for Youth Impact, is also crucial to the future of building a sustainable market.
Let theory and reality collide
Whilst we do not have all the answers, we believe that sharing first-hand experience from charities and social enterprises is crucial. Here are five thoughts for charities and social enterprises looking to build a case for social investment:
- You won’t know until you try – be ambitious and learn through doing; actively explore options alongside partners, and where possible put ideas into practice.
- Build a social investment strategy – look wider than any individual model to how social investment complements your wider funding strategy. For instance, crowdfunding might suit your organisation more than a social impact bond would.
- Adopt the principle of collaboration – start with all the potential partners around the table and develop your social investment strategies from there; traditional roles of commissioner, provider, and investor all need to adapt.
- Focus on outcomes for individual beneficiaries and the system as a whole – this can remove silo effects from day one and should encourage efficiency in your approach.
- Get impact and investment ready – build internal capability and draw on a range of external expertise around business case and financial modelling, impact measurement, data collection and analysis, partnership arrangements, and information sharing.
We are only two practitioners working in this field and we have benefitted greatly from the experience of other providers, intermediaries, commissioners, policy makers and investors. The principles of social investment are strong; turning this into a reality is our next great challenge as a sector.