Dai Powell's blog
Dai Powell is HCT Group's Chief executive. Dai has been Chief Executive since 1993, leading the organisation as it has grown from a small Community Transport provider into an award-winning, large-scale social enterprise. His blog explores ideas on social enterprise, transport and related issues. Always forthright, Dai’s views are his own and do not necessarily reflect the position of HCT Group.
Values, ethics and a new business ecosystem
HCT Group received a new round of social investment last week, with The Phone Co-op investing £500,000 of loan capital. It won’t be the largest investment deal done this week, perhaps not even the largest social investment deal done this week – but it is something both significant and immensely heartening.
I think it is significant – a leading co-op and social enterprise has chosen to invest cash surplus to their immediate requirements in another social enterprise. We’ll put that money to work, growing our business and increasing our social impact – and it will earn a decent return for the Phone Co-op. Can you imagine what would happen if other social enterprises and voluntary sector organisations followed suit, investing their reserves for a social as well as a financial return? The NCVO estimates that the UK voluntary sector held reserves of £48.8 billion in 2011/12; between us we should change the world!
There is always a lot of talk in the sector on social investment, is it good for the sector or not, will taking investment dilute the mission or divert attention from donors, whose money is (allegedly) free?
I also heard a comment this week saying that it is not ethical to take social investment, arguing that it is wrong for anyone to make a return out of someone doing good, wrong to make a return from poverty or hardship and that all social investment does is commoditise disadvantage.
This is absolute and utter nonsense, if anything is commoditised it is the solutions to poverty, hardship and disadvantage - and who would not invest in that?
If the UK voluntary sector does have £48.8 billion on reserve, what is it doing with it? Investing only for financial return? Or is it investing for a social as well as a financial return. Is it investing to do bad, to do nothing or to do good? It seems strikingly obvious to me that many organisations need to look seriously at what they are trying to achieve and use their balance sheets as a positive to society.
We want a world where co-ops, social enterprises and the voluntary sector buy from each other, invest in one another, building a new business ecosystem based on values and ethics. With HCT and the Phone Co-op, this is two organisations putting their money where their mouth is.
It’s also heartening - we want to work with investors who share our values. It allows for real dialogue and a strong relationship built on trust, which actually reduces risk to both parties. When we first started seeking investment finance many years ago, there were very few places to go; now there are an increasing number of like-minded social investment organisations to work with – and organisations like the Phone Co-op, looking for a better home for cash which is surplus to their immediate requirements. There are also organisations who can help put these deals together - this one was with the help of ClearlySo. When you borrow, you are, in effect, buying money. When we borrow, we want to buy social.