Ally Bally, Ally Bally Bee…

Posted: 02 July 2012, in Blog

Ally bally, ally bally bee, sittin’ on yer mammy’s knee, greetin’ for a wee bawbee, tae buy mair Coulter’s candy. (Trad. Scots Borders)

I’m very conflicted by Social Impact Bonds and Big Society Capital and its subsidiaries. On the one hand, I’m suspicious. The reason is a combination of my experience, my cynicism and my political mistrust of some of those involved. On the other hand, I support scaling up and access to capital for some social enterprises, especially those that adopt a “more than profit” approach and see the State as both a sometime partner and a rival.

I guess my brain is hardwired to query the cost of capital, investor motives, governance costs, the relationship between investors/lenders and social enterprises, how decisions will be taken, who determined who got/gets involved and how easy it is for social entrepreneurs to change things if they are unhappy with the way these initiatives pan out. I’m Scottish, apt to be thrawn, and I don’t believe in silver bullets or magic solutions. I also (sometime) agree with old Ronnie Reagan about the most terrifying words in the English language: ‘I’m from the government and I’m here to help”.   Mind you he also said “Trees cause more pollution than automobiles”.

Check these two sites out for further information and insight:

http://www.socialedge.org/discussions/responsibility/social-impact-bonds?utm_source=Social+Edge+Newsletter&utm_campaign=879f5e3f87-Newsletter_Arianna_Huffington_on_Empathy4_15_2012&utm_medium=email

http://www.bigsocietycapital.com/pdf/BSC%20Vision,%20mission%20and%20activities.pdf

With SIBs, a fair mind will probably agree that the jury is out but acknowledge that the massive hype is unfortunate. Trying to run before you can walk is a classic business mistake and I do hope that there are folk with commercial experience on the SIB team who can ca’ canny. The pitfalls will be related to impact assessment, metrics, managing (over)expectations and avoiding hospital passes.

The latter is especially fraught because there are no guarantees that prisoner rehabilitation programmes will run smoothly. It will be squeaky bum time if the Daily Mail gets hold of an embarrassing incident or “failure” and query the validity of the whole programme. My advice would be to be pre-prepared for that eventuality and go on the front foot from a PR point of view before the almost inevitable clanger occurs.

What may (hopefully?) occur is the recognition that SIBs are an experiment. Experimentation normally results in modification and innovation so I’m probably willing to give SIBs a cautious degree of support despite my reservations about “cherry picking”. On the other hand, private sector firms get lauded, rich, and awarded, for running public services badly so maybe I should just stop getting all lily livered and wait and see what transpires – with an open mind.

With Big Society Capital, I see an English metropolitan elite at work and as I’m not a member of that troupe I’m interested to see how they intend to communicate with folk out of their circle and location. A wee tip here for BSC folk might be to understand that the UK has devolved administrations and is made up of separate nations and regional identities. It still amazes me sometimes to witness the literal ignorance of our metropolitan chums that their “way” is not universally applicable throughout these islands. Beyond the M25 does seem to be a foreign environment to so many of them.

The BSC modus operandi is to lend to social investment finance intermediaries. These will then lend on to social enterprises. BSC declare their mission to be to help develop a strong, diverse and sustainable social investment market in the UK. My first concern is to ask if social investment finance intermediaries are the same as traditional CDFIs and if not, does BSC have plans to encourage the private sector to establish new social investment finance intermediaries. It is that word diverse you see.

If diversity creates opportunities for the private sector chums of Sir Ronald Cohen et al to make obscene or unfair profits whilst donning the mantle of a social purpose organisation, expect the brown stuff to hit the fan. I also wonder if local government “social enterprises” (sic) such as leisure services trusts will take advantage of this funding. The involvement of the private sector could be a game changer for the sector (dormant account monies are just the start) but we are entering murky waters.

Let questions about motive, governance and attitude to profit and transparency dominate how we proceed with this because if we just sit passively, then we all know what we are going to end up with – and it ain’t what we want

I’m away for a lie down.

Morethanprofitman 

 

NOTE: This opinion piece blog does not necessarily reflect the views or beliefs of Social Enterprise Scotland.