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Would you make an investment if it led to social change?

Social investment

Today’s the UK’s first Social Saturday, a day to celebrate social enterprises – businesses driven by a social mission. Rob Parker at the Cabinet Office wants to know whether you’d make a social investment.

The Better Leisure Centres, Big Issue, Divine Chocolate and Jamie Oliver’s Fifteen are just a few well known social enterprises. There are many more than you think – roughly one in five SMEs (small and medium enterprises) are a social enterprise, and they contribute more than £55bn to the economy each year.

A social enterprise is a business that trades to tackle social problems, improve communities and people’s life chances. They go beyond other businesses in that they make profit from selling goods and services, but then reinvest that profit back into the social cause.

Making a social investment

This Social Saturday many of us will be buying social. But what about our savings and investments? Well, there are social options here too.

I’m a Senior Policy Advisor at the Cabinet Office and I want you to know that it’s also easy to make a social investment. This is where you can put your money into businesses whose mission you support, leading to social and financial benefits. Check out our video for some successful examples:

The UK social investment market has grown rapidly over the past 10 years. It’s benefitted from government support over that time, including the creation of Big Society Capital, the first social investment bank.

The risks of social investment

Many people who come across social investment love the overall proposition – using their cash to contribute to social good. But some worry that social investments are too high risk, or too difficult to do.

The good news is that there are an increasing range of options, both for those looking to save for a rainy day and for those wanting to take higher risks. For example, if you’re looking to use your money for good while protecting your capital, you can put your money into a social bank or building society that will then invest in organisations that have a social impact. You might also look to put your money into a mainstream stocks and shares Social ISA.

Alternatively, invest directly into an organisation that matters to you and you could benefit from the social investment tax relief, which gives a reduction in your income tax bill. However, just like a mainstream investment, your money is likely to be more at risk than it is with savings products.

Achieve social change

Social investment offers a new way to achieve social change by helping the organisations and causes people care about to get the finance they need to set up and grow. In a way, it’s about letting us save more than our money.

But what do you think? Is making a social investment something you’d do? Would you consider a slightly lower financial return if you know you would get a social return too? And what if the financial returns were the same as you could get elsewhere?

Which? Conversation provides guest spots to external contributors. This is from Rob Parker at the Cabinet Office. All opinions expressed here are Rob’s own, not necessarily those of Which?.


Is this the conventional plc catching up with co-operatives?
As a coop member for more than half a century the benefits of investment in the local community are numerous and self-evident.
For those of us on low incomes direct cash investments is not an option but investing via the coop gives us the abiiity to choose to spend on those items we need and make a contribution to the community albeit small and protracted.
In addition to the normal share dividend it is possible to buy development bonds which unfortunately are not covered by any guarantees. Perhaps another thought for the Cabinet Office to pursue.
I like to think that the Cabinet Office recognise the 150+ years of cooperatives by offering more tax incentives to the certified fairtaxmark practices of the coop.

I’m of the opinion that I paid small fortune in Income tax, why can’t they make better use of that instead of wanting even more money from me. I saw in the news last week that MPs have claimed more in expenses this year than in the previous 5. Seems like the government should look to be getting their house in order first.

It resonates to me this is yet another Govt scheme to abrogate their fiscal responsibility, culminating in privatisation by the back door. UK citizens are recognised globally as being some of the most generous when it comes to charitable giving and in doing so receive tremendous feedback from helping those less fortunate than themselves so I am not at all sure whether this project would incentivise people to invest in something that has traditionally been funded, or partially funded by Govt through taxation.

A recent report submitted by Rethink exemplifies some of the consequences caused by cut backs in rehabilitation services for people suffering from mental illness for example. Mental illness accounts for 23% of ill health in this country but receives only 13% of the NHS budget. Mental health and social services are being over stretched because hospital rehabilitation wards have closed as patients are discharged into the community with substandard care sometimes left isolated in flats on their own without the support so vital to their recovery.

It is the responsibility of the NHS to provide funding for these people through taxation, therefore I would be very reluctant to engage in any Govt financial initiative involving a social bank with little or no guarantee who would be the main beneficiaries of this scheme.

I am left wondering how many of the thumbs down voters are aware of the proportion of tax they contribute that ends up lining the pockets of shareholders of private healthcare companies. For this reason I would be reluctant to invest in any govt scheme which would redress the shortfall between the tax I pay to those shareholders and the tax I pay which should be allocated for social and healthcare enterprises.

The money donated to charities amounts savings of millions of pounds for the govt. If people decided to invest in schemes of this kind charitable organisations would surely lose out and the choice would be left to the Cabinet Office to decide who gets the handouts.

Notwithstanding the hundred other priorities for taxpayers money, I would like to think that if I, as a citizen stakeholder, were to contribute additionally and directly to social change then I would want to see a positive social benefit for my stake. That means measurable KPI’s that appeal to the quorum. I would want to be involved in some way and I would want it driven by a NDPB, devoid of politics. The matter is immensely complex and my gut instinct is that UK plc has a poor track record of delivering tangeable benefits on major initiatives and tax relief on innovation is subject to HM Treasury politics.

In principal, yay! In practice, nay!

This is brilliant! Everyone thinks carefully about their charitable donations and what happens to taxes, but not enough thought goes into where our savings and investments go. What happens to the money we put into pension funds? Or where do charities keep their endowments? This money is put to use somewhere else until we need it again – I for one, would MUCH rather it goes to something like sustainable energy rather than porn, tobacco, arms and gambling. Lots of people have ISAs squirrelled away – why not make sure they’re doing something benevolent?

Like Emily, I’m interested. I would like to know more and to learn about possible problems before investing.