Big Issue Invest

Reclaiming the Future

By Danyal Sattar, CEO of Big Issue Invest

Danyal Sattar was recently invited to submit evidence to Lord Adebowale’s Commission on Social Investment. The below is based upon the speech he delivered at the Report’s Launch.

The final report of the Commission on Social Investment, chaired by Lord Adebowale, was published with a suite of recommendations on improving social investment practice and increasing the flow of funds to charities and social enterprise. It is a great report. 

The report, deeply rooted in the experience of social entrepreneurs and the social enterprise sector, reinspired me to reflect on where social investment came from.  While the Commissioners and those who have been around in and around our sector are well aware of it, newcomers to the field might mistakenly think this is a creation of high finance.  On the contrary, the roots of this generation of social investment in the UK, are rooted in the black community of south side of Chicago, in the USA.  It was in the 1970s, and the local bank was about to shut its doors and relocate, to follow its customers, to the suburbs of Chicago.  As those were its customers – it did not see Black people as customers, or a business opportunity.  The community, Black, White, of all colour and genders, rallied, and with the support of churches, foundations and local institutions, campaigned for the regulator to refuse permission for the bank to relocate and bought the bank.  Like so many financial institutions, ShoreBank did not survive the global financial crisis, reformed as the Urban Partnership Bank and part of the Providence Bank and Trust. 

Its legacy lives on, not just in the USA but here in the UK.  In the 1990s, Pat Conaty hired Steve Walker as the first CEO, and, chaired by Sir Adrian Cadbury, set up the UK’s first Community Development Finance Institution, modelled on the experience of ShoreBank, in inner city Birmingham.  ART Business Loans still exists today.

This is the root of social investment, not from the City or Wall Street.  It was from grass roots community activism.  We should be clear eyed about those roots, however.  This was always a partnership between community radicalism, and trusts and foundations and mainstream finance.  With Sir Adrian Cadbury chairing, one of the launch events of Aston Reinvestment Trust was in the Bank of England.  Steve Walker was seconded from Barclays and NatWest was an early support of ART, alongside an enlightened local authority with policy guarantee facilities to lever in funds.  Our roots at Big Issue Invest come from the experience of a start up social enterprise 30 years ago, The Big Issue.  In 2005, our own social entrepreneur Nigel Kershaw, starting up Big Issue Invest within the Big Issue Group.  In the same ways as ART did, Nigel reached out to corporates and banks and drew them in as supporters and co-creators. Deutsche Bank, HSBC, Unity Trust Bank, Barclays and many others, have in their time been strong supporters of us here at Big Issue Invest.  In this era of levelling up, let us also remember the long support local and regional authorities had over the years in creating local loan funds, and regional investment agencies.  Government funding created Futurebuilders and the Adventure Capital Fund, still here today as the thriving Social Investment Business. Together, we sit within the membership of our trade body, Responsible Finance.

The second place social investment came from is ordinary people. Triodos Bank, our largest social bank in Europe and the UK, had its roots in people saving money to support organisations and causes not funded by the mainstream banks.  Today, is our leading environmental and social lender, with billions of pounds of ordinary people’s savings across Europe as well as here in the UK.  Ecology Building Society was set up to fund ecological home improvements and renovation.  10 people put in £500 each, which was just enough in 1980 to capitalise and set up a building society. It is a £180m entity today.  Charity Bank, building on the roots of Investors in Society, lends out the deposits of ordinary savers.  Community Shares at Ethex, Credit Unions – there are more than 1.8 million members in credit unions today, representing more than 40 years steady growth in these community-based savers and lenders.

This modern wave of social investment from 2012 onwards, with the establishment of Big Society Capital, may look like a financial institution of the City, or Government but it is ordinary people’s money.  While some money was from four banks post the global financial crisis, the majority is ordinary people’s money.  It is the unclaimed bank accounts, where banks have been unable to find the customer whose money it is.  Big Society Capital is today the largest investor in us at Big Issue Invest, but when we apparently lend out “Big Society Capital’s money” and we apply it to social enterprise and enterprising charities, it is ordinary people’s money.  I think of them, the dead and departed, and I hope that they would all be proud, of what we do in the social economy with their money.  Their vision at Big Society Capital, in those early days, was to scale and grow, with new money and new skills, our small sector. It looks a better sector with them, than it would have been without them. 

So how do we implement the vision of the Commission on Social Investment? Let us remember our history and be empowered by it. 

As everyday consumers, we give up power over our own money and place trust in financial institutions that they will look after it well. It is however, still our money. It is our collective decision as to whether that trust has been well placed, when we see where our money has been invested.  Is it in our economy and society or is it in the negatives of climate change and pollution? There may never have been a golden age of banking, with a bank manager on every street corner serving their community, but that was something of the perception of what a bank manager once was and what banks were to our society.  I feel we need that back.  The seeds of a decent bank manager are here in our social investment sector, just as that potential is there in our great banks, building societies and financial institutions of the city.  Almost every time I talk to someone from the mainstream financial services industry, they are inspired by the way the conventional tools of finance, can be applied to social good.  Modern social investment must make use of that hybrid partnership that was there at the start of our community-based movement, between social enterprise, local and national government and mainstream finance.

Our roots are in diversity, across Black, White, Asian people, diverse geographies, gender, from inner cities to rural land trusts.  Just like the mainstream, we need to do better to re-establish our diverse roots. “Watch this space” for some exciting news of our new inclusive fund with UnLtd, and Shift this spring. We are responding and remembering. 

This report should be a rallying cry to all of us, to remember our roots.  It is also a rallying cry to mainstream finance.  Remember, you were there, in our early days, with us as partners in our journey.  So let “Reclaiming the Future” be an inspiration to us all, community, social enterprise sector and mainstream finance – in Jo Cox MP’s inspirational words, “We are far more united and have far more in common with each other than things that divide us.”

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