“I’m encouraging young people to become social business entrepreneurs and contribute to the world, rather than just making money. Making money is no fun. Contributing to and changing the world is a lot more fun.” M.Yunus
It’s been a year since I returned from my work in India. So much has happened I barely know where to begin. Filled with hope and distant dreams of being able to improve the lives of those in need, I began another journey – this time to find out how I was actually going to achieve this. However, my three criteria were not going to make this road easy:
- Firstly, I wanted to utilise my existing financial skills and experience to make the greatest social impact possible.
- Secondly, I wanted that impact to be primarily appropriated in India.
- And thirdly, after four months abroad and with the desire to be near friends and family for the short future, I wanted to be based in the UK.
I initially looked to the international charity sector. However soon discovered that although there are a number of fantastic development charities in the UK helping to alleviate poverty and injustice all over the world (Save the Children, Everychild, Water Aid, and Oxfam to name but a few), I didn’t feel I fitted in to any of the finance positions available. Could I really see myself doing audits or project accounting in an office, even if it was in Tanzania, Kenya, or India…? My real passion still lay with microfinance and social businesses to solve these problems.
The second issue I had was that most of the funds and organisations focussed on microfinance and SME business development aren’t based in the UK. There are a few in Europe (the Dutch especially are progressive in this sector) but most are unsurprisingly based in their country of focus – India, Indonesia, Cambodia etc. Even if I was ready to head back to Asia again, most of the opportunities I found there were either poorly paid (sometimes on a volunteer basis again) or on short term contracts. After being out of work for six months, neither seemed ideal!
Ignoring criteria two, the first and third criteria were not entirely difficult to solve given my unrealised but opportune timing. With the launch of the Big Society Capital in April 2012 there were a number of social funds in the UK launching or expanding their teams, eager to ride the impact investment bandwagon. For those not aware, the £600m BSC fund is the first social investment institution of its kind anywhere in the world, with the aim to build a sustainable social investment market in the UK and help social sector organisations increase their impact via intermediaries such as other funds. Where has this £600m come from? Around £400m is estimated to be transferred into a trust from accounts dormant for over 15 years in the UK. The remaining equity in BSC is £50m each from Barclays, HSBC, Lloyds Banking Group and RBS, made in the context of wider discussions (known as the Merlin agreement) with the Government on economic recovery.
I ended up applying to five social funds operating in the market, and after a number of interviews, accepted a job with Nesta, an independent UK charity, to be an impact investment analyst and help launch their new impact investment fund. My role was to provide financial analysis and evaluation of new investment opportunities and proposals in the social impact market. However with the fund yet to be launched I was also involved in fundraising, mapping the market, and defining our investment criteria. In the end, the team decided to target social innovations that have a positive impact on:
- the health and wellbeing of an ageing population;
- the educational attainment and employability of children and young people;
- the social and environmental sustainability of communities.
Another interesting concept was how the fund’s impact performance could be measured. Would it be via a theory of change? The monitoring of defined social KPIs? Or maybe through control tests? This is an ongoing issue with many impact funds and one in which I feel there is no defined answer. It really comes down to the individual investment and its social aims for the business. Nesta have recently published a report on their standards for evidence here.
I relished the opportunity to work with some fantastic people, all passionate about harnessing new and innovative business ideas to address social challenges facing the UK, whether this be through investments, grants, or mobilizing research, networks, and skills. I also met some really interesting and inspirational social organisations – a few of which I’ve listed here (do check out their sites!).
Social businesses really can be one of the most sustainable ways of creating positive impact. As Muhammad Yunus said, “The challenge I set before anyone who condemns private-sector business is this: If you are a socially conscious person, why don’t you run your business in a way that will help achieve social objectives?”
However as much as I knew the fund would make a positive impact in the UK, often my mind would wander back to the people I met in the villages in Pondi or the street children in Dhaka and knew international development was where my passion really lay.
As you may have guessed, I ended up leaving Nesta due to an exciting opportunity that came up in the development sector. I’ve since heard the fund launched in October 2012, they are on the way to making some innovative and impactful investments and I wish them the best of luck. I do feel very fortunate to have been part of such an interesting time in the UK social market and am looking forward to see how it progresses in the near future. As for my new role, all will be revealed in the next blog…