Holger Westphely

Former Acting Head of Venturesome

Charities Aid Foundation

Opportunities for social snvestment over the next decade

9 February 2022

A response to the Commission on Social Investment report.

As CAF Venturesome reflects on making social investments for 20 years, Holger Westphely takes a look at the findings of The Commission on Social Investment’s recent report and shares how Venturesome plans to offer patient, flexible capital to social enterprises led by women of less represented ethnicity.

After two years, The Commission on Social Investment, led by Lord Victor Adebowale CBE, published its report into the social investment market with significant findings to reform across the sector. The main message of the anticipated report was that ‘social investment has lost its focus – supporting the growth of social enterprise.’

Social enterprises are an effective and proven way to address social problems from the bottom up.  By reinvesting their profits towards a purpose, social enterprises can help to tackle social problems, improve communities and individual lives, and positively impact the environment.

Across the UK, more than 100,000 social enterprises collectively turn over £60bn a year and employ 2 million people. They create jobs, encourage opportunity, tackle inequality and improve our environment.

The report makes several recommendations to encourage more ‘patient, concessionary capital’ for lending to social enterprises.  At CAF, our social investment comes exclusively from philanthropy, through our private clients, businesses and trusts, which means we are already able to offer the patient and affordable capital called for in the report. We are also looking at ways to become even more flexible and provide more options to social businesses with potential that may have previously been overlooked in the market.

Getting investment to a diverse range of enterprises

In addition to the calls for an injection of capital, the part of the report that particularly caught our attention were the findings that minority-led and regional enterprises have been ‘underserved by social investment’, a reality that was already on our radar.

That is why we are launching a pilot ‘accelerator’ programme to offer interest free loans and grants to female social entrepreneurs from diverse backgrounds working in deprived areas. This will be offered alongside a 6-month programme of non-financial support, tailored to the business.

The female entrepreneurs will receive ongoing support for the lifetime of the loan (up to 5 years) and will be able to access social investment from our main fund, at a preferential interest rate for up to 10 years.  This means these entrepreneurs will have access to flexible capital for up to 15 years, as well as mentoring and coaching to help them grow their social businesses, employ more people, and support their communities.

We have already secured £500k worth of philanthropic funding to use in 10 interest-free loans of up to £50k and we are asking philanthropists to be part of this high impact fund so that we can include blended finance grants and business coaching.

We know that social investment has not always got it right. Through our current funds and our new accelerator programme, our aim is to ensure investment is directed towards a more diverse range of social enterprises to help them launch and grow.

In the context of the Government’s Levelling up agenda, we look forward to seeing their response to the recommendations. Indeed, the Levelling Up White Paper nodded towards greater social investment. Collectively, we must consider how we can continue to improve the market for social enterprises, which have a considerable impact on our communities.

About CAF Venturesome

CAF Venturesome is celebrating 20 years of social investment in 2022.  To date we have lent £60m in 700 social investments as well as deploying £1m in 38 blended finance grants.

Please get in touch if you would like to find out more about our Accelerator Programme venturesome@cafonline.org.