For starters, just think how many Social Enterprises, Voluntary and Community Organisations might be rescued or saved with the money spent on this irrelevant London Bubble Bankers’ Beano! In times of harsh austerity, Huckfield and many others reckon that the day long free binge for Social Investment Financial Intermediaries on Thursday 06 June was insulting.

The People in the Bigger Houses

Like many readers, while at school Huckfield did a rural paper round on a bike. The bigger houses took The Times or the Telegraph and were usually out on Saturdays when you rang the doorbell to collect the money. Since this was rural Worcestershire, the bigger houses also had a car and mains electricity. To see the Queen’s Coronation on June 02 1953, you had to find somebody with a black and white TV and ask if they’d let you watch.

The great majority of Social Enterprises and Third Sector Organisations must surely have felt they were looking at people in the big country houses when they saw the Social Impact Investment Forum on Thursday 06 June 2013, hailed widely in the London Bubble as Britain’s “leading the world” contribution to the G8 Summit. The Forum launched:

  • A Social Stock Exchange, which, as one might expect, lists Social Enterprise UK as one of its ‘friends’! To keep them company, solicitors Bates, Wells and Braithwaite provide both a Board Member and the Company Secretary. It’s the usual London Bubble suspects. Like many others, Huckfield struggles hard to equate supporting hard pressed Social Enterprises with any of this.
  • A Global Learning Exchange on Impact Investment. This sounds like code language for public funding to send representatives of various Social Investment Financial Intermediaries on round the world trips. Again one struggles to think how any hard pressed Social Enterprises here will benefit.
  • Consultation Draft on Development Impact Bonds. This sounds like the International Department for Social Impact Bonds. Presumably this will attract another £10mn “technical assistance” support from the Cabinet or Foreign Office for more trips abroad?

A full week later, the rest of us are still asking what relevance has any of this for the great majority of Social Enterprises and Third Sector Organisations outside London and their often precarious existence? If those in the London Bubble want to hold an irrelevant media extravaganza like this, why don’t they approach some bankers to fund it?

Support from Investors

At the Social Impact Investment Forum , there was the customary open letter of congratulations from the “industry” – Investors Support G8 Efforts to Catalyse Impact Investing, which included:

    “We applaud Prime Minister Cameron and officials from G8 countries for their proactive step to embrace the promise of impact investing as an important complement to existing efforts by the public and non-profit sectors.”

Since some of these are either existing or wannabe Social Investment Financial Intermediaries (SIFIs) perhaps they should also have declared their financial interest in hoping to benefit from all of this?

There were also some interesting figures for the Investment and Contract Readiness Fund:

    “The ICR Fund has approved 27 applications to date, committing up to £2.7mn of grant support to a range of ventures across different sectors, and is on target to meet the full £4.5mn budgeted for 2012 to 2013”.

One wonders how much of this is going to the 27 Investment and Contract Readiness Intermediaries, listed in Who will Speak Out against the Financialisation of Social Enterprise? on this site and how much to ultimate Social Enterprise beneficiaries?

Typically, like many Social Investment events in the London Bubble, at the Social Impact Investment Forum how many attendees were other SIFIs wondering how they might jump on the bandwagon?

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Growing the Social Investment Market Update

To support the Social Impact Investment Forum, there was also a rushed Growing the Social Investment Market: 2013 Progress Update. It is difficult to find anything new in its 25 pages, but on page 21 there is the most intriguing statement:

    “Support Investment Readiness
    “4.7 To make it easier for social ventures to locate the investment-readiness support that they need, we are working with the market to create a ‘what works’ evidence base for what types of support are most effective. We are also working with the Design Council to map sources of funding for investment readiness support and communicate this to frontline ventures.

Since its resuscitation as a drowning Quango, is this an example of the Government’s “Nudge Unit” Behavioural Insights Team dreaming up funding to keep the Design Council alive? Or is this just hurried proof-reading?

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Social Enterprise Numbers – Call Yourself a Social Enterprise if you Want

Social Enterprise Market Trends, published by the Cabinet Office for the Social Impact Investment Forum, included a new “good fit” concept and some astonishing Social Enterprise numbers.

“Good Fit” Social Enterprises

The Cabinet Office has introduced a new definition, which really means “You can call yourself a Social Enterprise if you want to”. Page 8 says:

  • The Classification of a Social Enterprise
    In the Small Business Survey (SBS) 2012, 24% of SME employers thought of themselves as Social Enterprises (defined as a business that has mainly social or environmental aims)”
  • “Whether a business answers ‘very good fit’ or ‘quite good fit’ is perhaps a judgemental matter, dependent on how a particular individual chooses to express themselves… For this reason, Report will focus on both those enterprises who consider themselves a ‘very good fit’ to the Social Enterprise classification, and also those enterprises who consider themselves a ‘good fit’ to the Social Enterprise classification (which includes both those enterprises who think that are a ‘very good fit’ and ‘quite a good fit’, to the social enterprise definition). The ‘good fit’ classification is closer to that employed by Social Enterprise UK.”

Using this “good fit” definition, page 10 onwards then goes well beyond the hype of Social Enterprise UK on page 8 of State of Social Enterprise Survey 2009 and on the acknowledgements page of Social Enterprise UK Fightback Britain 2011, both of which reckon that there are 62,000 Social Enterprises contributing £24bn to UK Gross National Product. The following is a small sample of what the Government would like us to accept as the ‘new normal’:

  • Total Estimated Number of UK SME Social Enterprises 2012. Page 11 Table 3.3 shows, using the ‘good fit’ definition, 688,200 Social Enterprises in 2012. But only 179,500 were employers.
  • Gross Value Added by Social Enterprises. Page 14, Table 3.9 shows £55bn Gross Value Added by all ‘good fit’ Social Enterprises and £41bn by those who were employers”.
  • Legal Status. Page 20, Table 4.5 shows that nearly 40% of ‘good fit’ Social Enterprise were Private Limited Companies. This has fallen from over 50% in 2010.
  • Regional Trends. Page 25, Table 4.10 shows ‘good fit’ Social Enterprises ranging from 4.6% in the North East to 17.5% in the Southwest.
  • Index of Multiple Deprivation. Page 26, Table 4.11 shows that nearly 28% in the Most Deprived Areas were ‘good fit’ Social Enterprises, compared with only 15% in the Least Deprived. This is clearly important for public policy, service delivery and employment in socially excluded areas.

An excellent article, Methodological Critique of the Social Enterprise Growth Myth, by Simon Teasdale, Fergus Lyon and Rob Baldock in the Journal of Social Entrepreneurship March 2013, is probably more accurate. On page 15:

    “The reinterpretation of these elements allowed private businesses to be classified as Social Enterprises such that almost 90% of the mythical 62,000 Social Enterprises are organisations which would not have been considered Social Enterprises under the original interpretation of the definition. The most recent NSTSO (National Survey of Third Sector Organisations) allows an approximation as to how many Social Enterprises there are in the UK, meeting the 2004 interpretation of the definition. Our analysis suggests around 16,000 TSOs (Third Sector Organisations) would be considered Social Enterprises using this approach”.

Huckfield and many others others reckon that the 16,000 Social Enterprises figure is more accurate.

Social Impact Investment Forum Hoist with its Own Petard

Social Enterprise Market Trends, published by the Cabinet Office for the Social Impact Investment Forum, continues with further analysis which does not look encouraging for wannabe Social Investment Financial Intermediaries:

  • Income Received from Grants and Donations. Page 39, Table 5.7 shows none for 85% of ‘good fit’ and 83% of ‘very good fit’ Social Enterprises.
  • Whether Sought Finance in last 12 months. Page 46, Table 7.1 shows 28% for ‘good fit’ Social Enterprises.
  • Main Reasons for Applying for Finance. Page 47, Table 7.2 shows 57% ‘good fit’ Social Enterprises seeking finance for working capital/cash flow.
  • Types of Finance Sought. Page 48, Table 7.3 shows 82% ‘good fit’ Social Enterprise seeking loans/overdrafts and only 13% seeking Grants. The same table shows only 2.6% ‘good fit’ Social Enterprises seeking Asset Finance.

Tables 7.2 and 7.3 above cannot be good news for SIFIs (Social Investment Financial Intermediaries) seeking investment opportunities!

Huckfield will in future provide more analysis of Social Enterprises’ funding needs. But in the meantime, for London Bubble SIFIs, these figures are not encouraging.

Alongside this, further difficulties for SIFIs are shown in the BIS Business Support for Social Enterprises: Findings from a Longitudinal Study, October 2011, based on research by the University of Durham.

  • “Finance Related Issues” on page 33. “Issues are also reported around equity funding. …Despite this in November 2010, Triodos closed their Social Enterprise [equity investment] Fund – targeted at those SEs which were ‘commercial in their approach’ with the potential for a return. Triodos only made one investment from 500 enquiries over an 18-month period”.
  • “6.4.1 Levels of demand and levels of success” on page 97. “Survey data shows evidence of unmet demand for external finance from institutional funders. Access to finance was the single largest barrier reported by respondents to State of Social Enterprise 2011 . 44% indicated that availability and affordability of finance was an obstacle”.
  • “Access to external (non-grant) finance is one of the main barriers to growth among Social Enterprises. Awareness of finance products among our sample organisations was varied, ranging from a comprehensive grasp among larger organisations and a minority of the smaller Social Enterprises, to relatively poor levels of knowledge – particularly of non-bank products – among many of the smaller organisations”.

The last two bullet points above are taken from Social Enterprise UK’s Fightback Britain: State of Social Enterprise 2011.

All this shows that these three publications offered for the Social Impact Investment ForumCabinet Office Social Enterprise Market Trends 2013 , BIS Business Support for Social Enterprises: Findings from a Longitudinal Study, October 2011, and Social Enterprise UK Fightback Britain 2011 – offer no real evidence of any significant demand for Social Investment.

Huckfield and many others wonder how much longer the Government, supported by London Bubble SIFIs and Social Enterprise UK, can continue to claim that Social Investment is Britain’s world leading initiative?

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