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On 5 April 2012 - 6:18pm

The point is that no one knows whether this neo-liberal Utopianism will work. But its advocates will need to explain it more clearly before individual or corporate investors can be expected to sign up with hard cash.”

That’s Martin Bright, blog for The Spectator about yesterday’s long-awaited launch of Big Society Capital, a wholesale finance institution ‘established to develop and shape a sustainable social investment market in the UK’.

Bright’s actually quite keen on the idea of Big Society Capital, and social investment in general but he also raises the point that: “Big Society Capital will not save charities now facing closure because of the withdrawal of local or central government grants. This is about creating a whole new culture of social investment that should probably not be called charity at all. Those encouraged to invest under the new models developed by Big Society Capital will be expecting a return. This is not philanthropy.

The fact that Big Society Capital is not just dishing out some money to worthy causes is hardly big news to the social enterprise movement but, in these moment when social enterprise (and socially enterprising charitable activity) briefly gets a burst of coverage in the mainstream media – such as this really good piece featuring HCT Group on yesterday’s BBC News – it’s important to remember that doing business for both financial and social return is still quite a complicated idea for most people not directly involved in trying to do it.

My position on Big Society Capital and the ‘social investment market’ in general has always been a broadly hopeful scepticism. I completely agree with Patrick Shine of FranchisingWorks – speaking to the BBC yesterday – when he says that the big barrier to growth for social enterprise has been ‘the absence of risk capital’. One reason for my scepticism about the social investment sector in the pre-Big Society Capital era is that this is precisely the kind of investment it has talked about conferences but failed to deliver in practice.

In a blog post yesterday, my fellow hopeful sceptic, Toby Blume, of Urban Forum, cut through some more of the (well-intentioned) bluster around the Big Society Capital project. He’s definitely right to point out that the fact that Big Society Capital’s money came from dormant accounts doesn’t obsolve politicians from responsibility for using it wisely: “Perhaps spending £400m on building the market for social investment is a good idea. But we don’t need to blithely accept that this is the only way this money could be used. It could have been used to support the thousands (hundreds of thousdands?) of charities and community groups that have seen their funding cut as a result of spending cuts…

The big underlying question, though, is about the ‘whole new culture’ that Martin Bright anticipates. Those of us working in social enterprise all get the idea – that social enterprises (and socially enterprising charities) are businesses who, if investors are prepared to take the risk, will often be able to deliver both a reasonable financial return and a transformative social return. But to what extent is that idea a practical reality.

It’s definitely true that, when social enterprises respond to questionnaires, one of the biggest ‘problems’ highlighted is always lack of finance. For example, 44% of respondents to last year’s Fightback Britain social enterprise survey claim ‘the availability and affordability of finance to be their greatest barrier’. The problem is it’s impossible to say how many of those 44% are ticking that box as a proxy for ‘we really, really, need some money’ as opposed to ‘our business could be much bigger, and deliver far more social impact, if only we could get a quasi-equity loan’.

The clearly are some social enterprises, HCT Group being one, for whom the latter statement is true but equally clear is that, right now, there are nowhere enough other similar social ventures for Big Society Capital to invest £600 million with a realistic hope of getting its money back. The gamble the government – and social enterprise leaders – are taking is that massive injection of cash will stimulate the creation and growth of significant numbers of relatively large social ventures that are able to generate a trading surplus.

At yesterday’s launch, the prime minister, David Cameron, said: “Big Society Capital is going to encourage charities and social enterprises to prove their business models – and then replicate them. Once they’ve proved that success in one area they’ll be able – just as a business can – to seek investment for expansion into the wider region and into the country. This is a self-sustaining, independent market that’s going to help build the big society.”

Whether or not Big Society Capital is ultimately self-sustaining depends, one way or another, on income streams to social ventures that are not. Some social ventures will benefit from investment, others would be better off without it, but there’s no getting away from the need for revenue. The ‘whole new culture’ Martin Bright talks about will still involve social ventures being paid to what they do by some combination of public sector agencies, and people or organisations who use their services (or buy their goods). This is not a politically neutral space. The arguments around what is paid for, how and by whom will be heavily contested. And, for the foreseeable future, there will continue to plenty of vitally important charities (and some organisations calling themselves social enterprises) for whom the only logical business model will continue to be ‘get some money through grants and donations’, ‘spend it’.

But this is a big moment. If UK social enterprise were a Samuel Beckett play, Godot would now have appeared on the stage. Big Society Capital’s investments will (hopefully) help a good number of existing and new social ventures to get their products to a wider market, it’s difficult to predict what might happen next.