For different reasons, David Floyd’s excellent and, as always, thought-provoking paper on government subsidy risks downplaying the role philanthropic capital has played. To date, government, government-backed funds, and the Big Lottery Fund, have provided £1,063m of subsidy to social investment. Yes, that’s £1 BILLION of subsidy. Now, David does make the point (which I strongly agree with) that there is a “distinct role” for philanthropic capital, and that the spectrum (philanthropic to ‘commercial’) is not binary. Nevertheless, taken together these two very different reports (different perspectives, different audiences, different aims) risk embedding a narrative of social investment which massively downplays the role of philanthropic capital.
Does this matter? Yes! The risk of downplaying philanthropic capital is that collectively we don’t consider our full suite of tools to drive social impact.
THE GROWTH OF SOCIAL INVESTMENT
The growth of social investment - and in particular the potential of bringing in more responsible, sustainable and impact-driven capital (as per the diagram above) - will be genuinely transformative. And much of this growth will have a dependency on the catalytic and risk-taking role philanthropic capital plays in so many different ways - be it blended finance (e.g. Access Foundation), impact-focused high-risk social investments (e.g. CAF Venturesome), funding for additional support to investees (eg. CityBridge Trust), and much more. Rewriting the narrative (however unintentionally) to leave out philanthropic capital risks neglecting these hugely valuable tools. And the prize of huge social impact is simply far too valuable for us not to consider every tool in our toolkit.
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