The evaluation report on the Cabinet Office’s Investment and Contract Readiness Fund shows that this new and innovative Fund is a big step in the right direction, but there is a long way to go.

While the long-term prospects for social finance are very promising the reality is that the majority of today’s deals are asset-based property loans and there is a limited number of funders that will invest into other types of projects.

The ICRF has an opportunity, though, to be an important catalyst by funding market-making activity, connecting and attracting new types of finance to entrenched social problems that charities and social enterprise are tackling on society’s behalf.

But for this to happen; everyone involved needs to see ICRF for what it is – a catalyst – and embrace a “risk and reward” mind-set.

If ICRF is to make a real impact everyone involved need to take risks. Charities and social enterprises need to consider the ICRF fund as an opportunity to engage specialist support to catalyse their long term plans for growth rather than a grant to contribute to their overheads. Intermediaries should seek and support ambitious projects, unsure whether these will receive grant awards. The Cabinet Office and Social Investment Business, the Fund’s managers, should continue to encourage innovative propositions where there is tangible social return/need, and be comfortable that the headline success rate of the Fund may then fall. Big Society Capital as our sector’s financial wholesaler needs to be creative and flexible – two things that it doesn’t have a particular reputation for – in order to support social funders expand not so much the volume of capital but the range of financing they can offer to charities and social enterprises.

As an active Investment Readiness provider our team of consultants has to operate with the challenges of the current social investment landscape: where the reality lags someway behind the promise.

We know that 80% of charities and social enterprises in the UK say they are constrained because they cannot access the right finance, but often by “right” they mean “no risk” and it is this attitude that needs to change. The real winners will be those that use the ICRF programme as a way to draw in new types of finance and kick-start investment into long term social projects that they wouldn’t otherwise have been able to fund.

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