Finance focus has been bad for social investment, says Caroline Mason

01 Mar 2021 News

Dame Caroline Mason

Esmee Fairbairn Foundation

A financial services culture has damaged the social investment market, according to Esmée Fairbairn boss Dame Caroline Mason.

This approach meant it focused on finance structures at the expense of social impact, Mason told the Social Investment Commission last week.

Speaking on the same panel, Jonathan Jenkins, the former chief executive of Social Investment Business, said that in hindsight there had been too little “cognitive diversity” among investors.

The Commission, established by Lord Victor Adebowale, the chair of Social Enterprise UK, will report on its findings later in the year.


Mason told the commissioners that the “fixation on funds and scale” was unhelpful to charities and social enterprises, which would benefit instead from more local expertise.

She asked: “How do we have a spread of these funds and intermediaries across the country that understand their localities and understand what communities need and want, and can work with their communities? 

“Rather than having these monolithic structures that just add layer and layer of costs, and can never have the knowledge and impact because they are so far away from it.”

Aims versus structures

Asked by Adebowale why this “vision” had not taken hold in social enterprise, Mason said: “We have had 50 to 60 years of a certain economic model that has got an investment mentality around it.

“And I think the hardest thing to change is people’s culture and thinking. There are all these unconscious biases within financial services.”

Financiers sometimes assumed that they could solve social problems without help from other experts and “there is still quite a lot of this mentality”, she added.

Mason said that that most investors were well-intentioned but argued: “You have to understand what it is you are trying to achieve, the outcomes you want to achieve first, and then you design.

“You don’t put the structures in place first.”

She added: “Financial services have never had to consider the implications of what they do, ever.”

London financiers

Jonathan Jenkins, who worked on social investment at SIB, UnLtd and Nesta before becoming chief executive of London Air Ambulance in 2016, told the Commission: “This is really with hindsight, but there absolutely was an unconscious bias of investors and I can’t believe how little it registered.

“A lot of us were ex-city professionals, a lot of us were London-centric. There was no cognitive diversity in our investment processes. 

“That must have impacted on inclusion, access and equity, when it comes to getting involved in the investment space.”

On race 'we thought we were doing fine'

Talking about her charity’s ongoing work on racial equity, Mason said: “I can tell you really honestly, we thought that we were doing a really great job. 

“And then Covid and Black Lives Matter happened, and when we looked what we realised is that everything we did was implicit not explicit. 

“That wasn’t good enough.” 

The charity’s anti-racism work was “bundled” in with other efforts to address inequality, she said, “but there is something very specific, I think, about structural racism, that we hadn’t acknowledged and we hadn’t been explicit about. 

“We took lots of advice from lots of people and lots of training, and we have now got this action plan which covers everything we do.”

Esmée Fairbairn is now working to “keep it alive, real and relevant”, Mason said, adding: “We thought we were doing fine and actually realised that we were not doing fine.”

The Commission heard last week that some Black and ethnic minority social entrepreneurs are worried about "clear structural barriers" to accessing finance.

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