Social entrepreneurs could find themselves in ‘serious trouble' if they turn their backs on government, according to a leader in social investment.
Sir Ronald Cohen, director of Social Finance Ltd, chair of the UK government's social investment taskforce and founder of Bridges Ventures, warned delegates in a Skoll World Forum session that they needed to support government because it would offer support and new initiatives in the economic downturn, especially as philanthropic resources dwindled.
Tax incentives and a social investment bank connecting the social sector to the capital markets, set up using dormant bank account funds of anywhere between £400m and £2bn, and funding through social bonds of £700m, were high on his agenda.
‘If you turn your back on government because of the pressures on government you will be in serious trouble,' Cohen said.
‘We need government support because it has a major enabling role so we can do our work. If we want to create scalable organisations, we have to create social and capital markets with the government's help. We have to make our voice heard.'
But Cohen said it was not the senior politicians that needed the support.
‘It's not that government is not willing to help, it's that it is still thinking in the old paradigm. The voluntary sector is seen as an ancillary, like how private equity was seen in the 1980s - is it really going to get there and is it really genuine?,' he said. ‘This is what we're up against, not at the highest levels of government, but the civil service where departments have competing interests.'
While the session's moderator Matthew Bishop, chief business writer for the Economist, disagreed and said ‘running from the government is the last thing on everyone's minds', the US panelists - Jan Piercy, executive vice president of Shorebank Corporation and Sam Moss, president of Gray Matters Capital, a foundation creating and investing in new programmes, agreed with Cohen - especially as President Obama has established a social investment office.
Cohen added that match funding was essential to help organisations scale up at times when cash was scarce and that government could be the provider of this match funding.
‘Bridges Ventures got going because the government was prepared to match the £20m funding we already had. Matching is crucial in this crisis,' he said, especially over the next two years as he predicted the economy would not recover until early 2011.
