The City of London must embrace social impact investing in order to bridge the gap between the costs of meeting social needs and the limits of government funding, the lord mayor has said.
“The City has always been a crucible for debate, innovation and philanthropy. All three are crucial as we strive to rise to the complex challenges posed by the ‘new normal’ – a fast-developing globalised world where resources are increasingly scarce and in demand”, Fiona Woolf wrote in an editorial for City AM.
Reflecting on a lecture by Sir Ronald Cohen of Big Society Capital, who is also the chair of the G8 Social Impact Investment Taskforce, Woolf argued that London’s enterprise, expertise and energy could be invaluable in revolutionising charity.
“Philanthropy can be more than a matter of donations, at a time when the resources of the public sector are ever more constrained and demand on charities grows ever greater”, she said.
“Giving can also be an investment, bringing to bear the expertise of the donor and the charity or social enterprise to create a return on that investment and, crucially a social impact – a social outcome for investor, charity and beneficiary alike.”
“This has the potential to bring financial rewards, as money works hard but it also transforms lives, helps communities and strengthens society.”
Speaking to the lord mayor’s Charity Leadership Programme, Cohen said that social impact investment will “characterise our times”.
“Philanthropy based on charitable giving does not focus on achieving social outcome. We need to spur innovation, bringing social organisations to the scale to meet the needs of the size of population groups they are addressing”, he said.
In October, a survey by ethical bank Triodos found that nearly 3 million investors would be considering social investment over the following year.
Triodos also predicted that the take-up of social investment could double each year for the next three to four years.
“There is clearly an appetite among many UK investors to act responsibly”, said Dan Hird, head of Triodos Corporate Finance.
Meanwhile in December, the chancellor George Osborne announced that under the autumn statement, investors are to receive tax relief when they invest in social enterprises and social impact bonds.