- CHECK AGAINST DELIVERY -
Angela Smith speech to Good Deals Social Investment
Conference – 29 October 2009
Introduction
Thank you, good morning and welcome to you all. I’m delighted to be
here, and that the Office of the Third Sector is able to continue to
ndsupport the 2 year of this significant and groundbreaking conference.
I’m also pleased that the Department for Communities and Local Government has joined us. This shows the growing recognition of the importance of social investment across government.
We’ve come a long way in a pretty short time. Just a few years ago, my office, this job – a dedicated Minister for the Third Sector – didn’t
exist. Now, the UK government is at the forefront of the agenda, nationally and internationally.
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Of course, a few years ago, we were also operating in very different financial circumstances.
Today I want to talk about just what the change in economic climate means for the social investment agenda.
And why I think it’s also an opportunity for all of us, as much as a
challenge.
New financial landscape and reassessing value
The past 18 months have taught us, as a society, many lessons.
Not least is the need to reassess what constitutes ‘value’ in today’s
society.
We’ve learnt that focusing on maximising short-term financial gain is not only unhelpful to wider society, it’s not even good business.
Yes all businesses need to and want to make money.
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But there are real benefits to be had from measuring value social and environmental outcomes too – a triple bottom line.
There’s no one who understands that better than the people in this room today.
Vision for the Third Sector
The contribution that third sector organisations make to our society, the environment and the economy really cannot be overstated.
In 2005, social enterprises alone contributed ?8.4bn to the UK economy. Charities, social enterprises, co-ops and community groups change lives for the better every day.
And they do it in ways in which neither Government nor business can – often stepping in where the state or the market fails.
I believe that the third sector has an even greater role to play now.
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And key to this is a functioning social investment market.
My view is that if it were to work efficiently and at scale, this market could represent a huge potential for the UK.
We need to find ways to mobilise capital in the economy, for example from the private sector, from philanthropists and indeed from Government.
We need to get the best ideas into practice.
To do that, we need to unlock the power of the third sector to effect change.
Which is why we’re here today.
Why we’re here today – Social Investment
I’m excited about social investment.
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The past few months have shown us that investors – Government,
the private sector, as well as grant-makers and foundations – are all
looking for solutions that, while admirable and altruistic, are also sound and sustainable at the same time.
In Government, we’re thinking more and more about investing in third sector organisations to help develop the public services of the future
– helping social innovators thrive in public services and emerging stronger – rather than crumbling under contestability.
In this way, we believe we can improve public services for those who need them the most, deliver better value for money, and demonstrate how existing models can be improved.
I’m also aware that private firms are developing ways of investing in social enterprises to help grow the ethical businesses of tomorrow, seeking out the sustainable business models and the growth markets of the future.
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In this way, they help make markets work better for people and the planet, as social enterprises raise the bar for business and show what’s possible and what can be achieved.
Last but not least, grant-makers and philanthropists are also exploring investing in social action, looking at innovative approaches
to create more lasting and stable models.
Each of these is about exploring new mechanisms available to drive sustainable finance into the sector, helping to create economic, social and environmental value.
And they’re all part of a growing social investment marketplace here.
Almost every day I hear about new ways being explored to encourage the supply of finance into this area: new funds emerging; new players entering the market place.
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From institutions who’ve been around for a while, like NESTA; to new
funds or organisations, like Social Finance or the Social Investment Business; to individuals, like the passionate Oxford MBA students I met recently.
I look around this room today and I’m encouraged by the turnout of
this event – this room is full of influential people; passionate and thoughtful, all looking to achieve social transformation to make that difference.
Government’s role
And I can tell you that Government shares many of your goals. ; We want to achieve social change and social justice. ; We’re convinced that the third sector can play a significant role in
overcoming some of the most entrenched problems in society. ; We know that our own role is to step in where the market fails and
to help guarantee fairness.
; We’re clear that we want to crowd in – not crowd out – finance.
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; And we want to help the social investment market to grow and
thrive. For example through strengthening supply of finance,
building demand and making it easier for other players to get
involved.
We’ve done some of that already. But we want to do more.
Strengthening and catalysing supply
The Government has invested a significant level of money in the market:
; My own office’s ?215 million Futurebuilders Fund.
; The Department of Health's ?100 million Social Enterprise
Investment Fund.
; DCSF's ?100 million Youth Sector Development Fund. ; And CLG’s ?70 million Communitybuilders Fund.
But our aim must be to bring in finance from elsewhere – crowd in
and not crowd out finance – and mobilise mainstream finance for
social good.
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So I believe Government's role here is to meet gaps in the provision of capital, to go where the market will not, and, in doing so, demonstrate what is possible and lead the way.
For example, I recently announced our ?5 million investment in the Bridges Social Entrepreneurs Fund.
This fund, which receives matched investment from private individuals, foundations and institutions, is aimed at high growth social enterprises.
Supporting demand
We’ve done much to bring more finance into the sector.
But our job goes further.
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There’s often a missing link between social enterprises and funding. Not because the money isn’t there, but because organisations don’t get the right advice or relevant support to access it.
Viable business propositions often need support, handholding and patience before they are ready to fly.
So I’m delighted that we’re working with NESTA on the Social
Enterprise Access to Investment programme, designed to give social enterprises the help they need to access risk capital.
Making the market work more effectively
So, I think we also have a role in making the market itself work more effectively.
At its best, a confident and diverse market will have a range of providers working both in collaboration, and in competition.
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