Image of Amir Rizwan

Amir Rizwan

@amirriz1

Investment Manager

Charities Aid Foundation


THE COMMUNICATION PROBLEM BETWEEN SOCIAL INVESTORS AND SOCIAL ORGANISATIONS

A follow-up to our session at this year's Marmalade event on the topic

25 April 2017

On the 6th of April I was fortunate enough to attend the annual Marmalade event which is held in conjunction with the Skoll World Forum. I facilitated a session on the issue of communication and language between social investors and smaller charities and social enterprises: ‘Lost In Translation’. It intended to kick start a discussion on the communication challenges that exist between these two groups and whether such a challenge is leading to barriers in the way both sides are working together and perceiving one another.

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The session set out to explore a range of areas around the theme of communication and language which included:

  • Do social investors use too much jargon which can lead to smaller charities and social enterprises feeling overwhelmed?
  • Is the archaic language used by social investors leading to social organisations dreading the ‘due diligence’ process that they have to go through in order to secure repayable finance?
  • What role does communication play in reinforcing some of the cultural stereotypes that exist for both social investors (rich ex-City bankers without sufficient understanding of the sector seeking salvation) and social organisations (stuck in their old ways and refusing to adapt)?

This proved to be a lively discussion with a range of views from social sector organisations, funders and network bodies that engage with both the social investment sector and social organisations. A number of interesting themes emerged that ran across the vibrant discussions that took place:

  • The legacy of charities securing grant funding to support programmatic activity makes it difficult for organisations to adapt to securing social investment. The language used by social investors when interacting with organisations that have historically solely gone for grant funding can seem complex and confusing. This related closely to another interesting theme that was explored in the session around the challenges that the social investment sector has in marrying two different perspectives (finance and social impact) that communicate differently and use a different language to one another. Participants felt that the language around this from social investors is still very much ‘finance first’ with impact playing a more secondary role.
  • The challenge of language and communication has a direct link to capacity and size of organisations. For social organisations that have experienced staff members or a strong trustee board this is less of an issue. However, for small charities and social enterprises looking to take on social investment for the first time this is more pronounced. A key takeaway that came out of this theme was the need for an element of support for organisations that are going trough this process for the first time.
  • Social investors need to do a better job in communicating (one of the regular themes that came out of this session!). Social organisations looking to take on social investment bemoaned the lack of clarity that exists around what social investors need as part of the application process for a loan. The feeling from the session was that this was due to poor communication which is what leads to some organisations dreading the ‘due diligence’ process. There is a need for social investors to break down and articulate clearly the different phases of ‘due diligence’ that social organisations have to go through in order to successfully take on social investment.
  • There is a need for use of a language by social investors that removes the fear dynamic associated with taking on repayable financing. Participants felt that investors should be using more empowering language in line with the aims of social investment sector around helping charities and social enterprises grow and increase their social impact.
  • New initiatives such as Good Finance were seen as being a good step around demystifying the language around social investment but more is needed. A key theme that came up in the session was the constant need for social organisations to adapt and use the language of social investors – which can lead to further confusion and the feeling that it is a one-sided process. It was felt that social investors do not express the value proposition of social investment and the process organisations have to go through to secure it adequately. Why is this process complex and what are its benefits? More of an effort needs to be made to adapt the communication and language used by social investors to reduce the level of complexity that some social organisations see when they look to take on social investment for the first time.

We found this to be a fascinating and useful session that highlights some of the key challenges faced when it comes to communication and the use of language between social investors and social organisations. Whilst social investment has the potential to be a useful option for organisations to grow and develop there is a clear need to understand some of the challenges in how social investors engage with organisations looking to take on repayable financing for the first time. We welcome new initiatives such as Good Finance which is a great step towards reducing the confusion around jargon but more needs to be done by individual social investors on this issue.

We have a host of other insights and actions to take away from the session, which we will be working through over the coming months. We look forward to incorporating our findings to guide how CAF Venturesome supports local investment activity in the future as well as sharing our findings with the social investment sector. We would also welcome thoughts and comments on any of the findings we have listed above as a way of engaging with the sector on this issue. Use our twitter handle @CAFVenturesome or comment below to feed back any thoughts you may have on this topic and ways in which we can take this discussion forward.

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