Big Lottery CEO: why social investment can't just come in a size large

Dawn Austwick. CEO at Big Lottery Fund

More years ago than I care to remember I attended a rather noisy meeting somewhere in the City about alternatives to grant funding. I had recently become CEO at Esmee Fairbairn who at the time ran a small loan fund alongside their grant funding and I was intrigued by these pioneering proselytisers for social investment.  

A couple of years later we launched Esmee’s Finance Fund, and the rest as they say, is history, or almost.  

In 2010, I made myself somewhat unpopular at the Good Deals conference by suggesting that in any portfolio there is a trade-off between financial and social return and whilst we may all search for that golden nugget of everyone wins – market rate return, successfully transformed social issue, it’s rarely found.

But what’s important is that investors and applicants know where they are, or aspire to be, on that continuum, and can participate in the field. Inevitably with such an innovative and emergent field, this hasn't always proved easy.

So here we are in 2015, nearly ten years later, launching the Growth Fund. The UK’s social investment market is probably one of the most developed in the world, something we should be proud of, and I hope many of those people round that table in 2006 are feeling a warm inner glow from what has been achieved.

John Kingston was one of them: at the time he was running Venturesome and here he is steering Access to a happy future; and here I am at the Big Lottery Fund, one of its founding funders. What does that say – it’s a small world (too small?), we are nothing if not persistent? Either? Both? Something else - I’m not sure.

For me, today is the next stage on our journey, and a critical one at that, because this foundation and this fund are born out of a recognition that small and medium sized organisations, often the life blood of civil society, have found it difficult to navigate social investment to date.

We have been talking with Big Society Capital for many months about how to make social investment available to a wider range of organisations – often those medium sized charities, perhaps with an asset like a property, or a trading income, or an idea.  

People like those at Live Theatre in Newcastle, led by Jim Beirne, who acquired the site next door and opened a pub, then they acquired the building round the back and developed that into creative workspaces, and whilst they were about it, they developed an online creative writing course.  

Investment helped get these off the ground and the revenue streams now pay for new plays. Oh and now they're taking on a building on the next block.....

Or Global Action Plan who needed some patient equity whilst they built their consultancy services for corporates. Or Patchwork People in Darlington who used £10,000 to help set up a shop providing entrepreneurial business development experiences for disadvantaged young people in 2011 and went on to be a Big Venture Challenge winner in 2013, raised investment and are replicating their model across the region.

It is exactly this sort of scale and type of organisation, often quite entrepreneurial both socially and commercially, that has struggled to access the nascent social investment market.

There any number of reasons for it – it's too expensive, too time-consuming, too complex, social and financial returns are out of balance, the language is investment-speak, and so on. There are lots of reasons why it's been difficult, but the hope is that the Growth Fund can start to complement the more scaled end of the market and also the pioneers in this particular niche – folk like Venturesome or Lankelly Chase or indeed Esmee, where the starting and finishing point is social return rather than financial return or cost reduction, but where surprisingly good financial returns can end up being made nonetheless!

The Big Lottery Fund is putting £22.5m of grant finance into Access to help kickstart the Growth Fund, alongside a matching investment from Big Society Capital.  

The money is on the table for intermediaries to develop suitably scaled advice and investment funding for just those entrepreneurial social organisations, the majority of them charities, who to date haven't been able to access social investment as much as they have wished.  So, as the Growth Fund gets up and running, we will want to hear how well our money is working for you. You can find me at @DawnJAustwick. Keep in touch. 

Photo credit: Jeff Sheldon