Social investment is set to grow as more investors recognise the opportunities for getting a social and financial gain.
Work and Pensions Minister Iain Duncan Smith described the Social investment market as still in its infancy. It is worth around £190m today, a number that pales in comparison with the £3.6 billion annual outlay on philanthropic grant funding.
He outlined how the market will probably expand. There are likely to be more full-blown social investment projects like the Ministry of Justice Peterborough Social Impact Bond. The Cabinet Office funded Social Impact Bond pilot schemes are also exploring how up front funding for prevention and early intervention services can deliver better outcomes. The DWP Innovation Fund is also pioneering ways to make a difference.
There are already new projects on the horizon with the setting up of the world’s first ‘Social Stock Exchange’ for social enterprises, which will be located in London. There is also a major new source of investment funds coming on stream via Big Society Capital.
Social investment could be the tool for unlocking human capital at both ends of society, without being forced to rely on the generosity of a few wealthy individuals. Wealth creators in society can be encouraged to back projects which yield both a social return for the community and a financial return for them. Social investment brings a rigour and discipline that comes from someone risking their money on an investment and because of this it is very different to charity.
The need for social investment is to do something about the criminal waste of potential. Many young people who are out of work, on the dole, or in some of the toughest street gangs are harbouring a range of skills that could rival some top-paid professionals. They are just completely misdirected. There are young people who are mathematical whizzes when it comes to calculating their benefit claims. There are those who are able to pull apart and unblock stolen mobile phones, or fix up old bikes and mopeds. There are others who organise and lead highly complex gangs and drugs cartels.
Mr Duncan Smith said: “These kids aren’t stupid. They have just never had the opportunities that many of us were able to take for granted. It all started badly for too many of them – dysfunctional families, underperforming schools, intimidating street gangs and then too often into the arms of a welfare system that acts as a crutch, rather than a springboard for change.”