It seems suddenly that everyone is at it — pushing money in the direction of social investment intermediaries, that is community finance institutions and similar.
Third Sector Online announced today that Deutsche Bank is the latest to set up a ring-fenced fund of £10m to lend to existing intermediaries — operating rather in the way that the Big Society Bank will.
Money will be invested over the next three years and repaid over 10 years.
The bank’s head of UK corporate social responsibility says that the money isn’t coming out of the company’s CSR budget but rather is driven by “the idea of finding sustainable ways to tackle social issues”. The fund will attempt to break even, but is not intended to make a profit.
With everyone from government down intent on developing what Deutsche Bank calls “this new asset class”, it seems that lending institutions must be in hog-heaven: everyone wants to route money in their direction.
Is this good news for community finance institutions? Is it good news for the social enterprise sector? It would be interesting to hear what CDFIs and others think of these developments.
For some reason that I can’t quite put my finger on, it makes me jittery. If there is a genuine spike in the supply of investment capital for social enterprises then this will — by necessity — favour those most able to service debt finance. And that is of course how one would expect it to be.
But what about those that cannot as yet hope to service debt? Investors I know will argue that this makes them less business-like and that therefore they are not fit cases for investment. I could accept this if a simple return-on-investment business case were the only determining factor, but I don’t think it is. Social enterprises have a social purpose (it is this that makes them social) and in the rush to create a new arena for investment it seems to me that this is being conveniently brushed aside.
Perhaps I just have to accept that in the future the key interest in social enterprise will revolve solely around those that are most commercial, those most likely to produce a return. Whether this will also favour those social enterprises generating the greatest social as opposed to financial benefit really does remain to be seen, however.