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Big Society Capital chief says number of social investment players will rise

Finance | Vibeka Mair | 5 Jul 2012

Nick O’Donohoe, chief executive of Big Society Capital, has predicted that eight new social investment intermediaries will enter the market over the next twelve months.

O’Donohoe made the comments at a Big Society Network event on recent research into the social investment market. Opening the event, he said that the emergence of Big Society Capital and a flow of new money for the social investment market will lead to new ideas and interest.

Quoting Big Society Capital chairman, Sir Ronald Cohen, O’Donohoe said: "There are very few commodities where supply creates demand, money is one."

Continuing, O'Donohoe said that currently social enterprises trying to raise risk or equity capital had very few places to go, but that this would soon change:

“I confidently feel that in the next six to 12 months there will be seven or eight new organisations offering capital to social enterprises, and more people working to fund the next generation of growth enterprise,” he said.

Jonathan Jenkins, chief executive of Social Investment Business, who also spoke at the event, agreed with O’Donohoe:

“Nick is right,” he said. “New intermediaries will enter the social investment space.”

With this in mind, Jenkins went on to warn fellow social investment intermediaries that they would soon need to “up their game”.

Importance of language

Jenkins also warned that those in the social investment space would have to be careful about how they executed the new flow of money: “If it’s spent quickly and badly people will be turned off,” he said.

Commenting on the relationship between the seekers and deployers of social investment capital, Jenkins advised that those in the market needed to be “bilingual”.

“There is a tendency for discussions between seekers and deployers of social investment capital to deteriorate and confirm to stereotype.

“Investment managers who speak about wanting returns are viewed as capitalist pigs, and social investment seekers speaking about things such as good governance are seen as tree-hugging do-gooders.

“Language degenerates quickly.”

Commenting on other problems for those wanting to engage with social investment, O’Donohoe said many types of investors would consider social investment which generated social inpact and preserved capital, but there was a lack of awareness of where to go to make such an investment.

“It’s an exciting time to be involved in social investment,” he said. “There is a change in the zeitgeist with the post-credit crisis. Every investor from small retail to large institutions is feeling they would like some money directed to investments with social impact and protection of capital.”

Charity Bank sees significant increase in new depositers

Meanwhile, social savings bank, Charity Bank has reported a 200 per cent increase in new depositors.

Between January and June of this year, 440 new customers opened accounts, compared with 140 for the same period in 2011. Visitors to Charity Bank’s website and savings enquiries have also doubled in the past week.

Commenting of the rise in new savers, George Blunden, chairman of Charity Bank, said: “Ordinary members of the public are beginning to realise that there is an alternative to depositing their savings in commercial banks, where they will have no idea what use their money is put to.

“The charity sector continues to struggle when it comes to raising finance. Traditional banks are still very reluctant to lend to those organisations which are struggling to deal with escalating social issues. Our work is opening up loan finance to excluded parts of the charity sector.”

Directory: Big Society Capital | Charity Bank Ltd | The Social Investment Business
Who's Who: Nick O'Donohoe