The first independent review into the effectiveness of Big Society Capital has reported “substantial progress towards its ambitious and challenging objectives”.
The four-yearly audit by the Big Society Trust is part of a new process to be carried out every year (on rotation) on one of the four companies it oversees.
BST inspects the governance of the organisations that receive monies assigned as part of the English allocation of dormant assets funding, which include the Youth Futures Foundation, Fair4All Finance and Access as well as BSC, to ensure that the organisations remain ‘on mission’.
The review panel interviewed a range of 50-plus stakeholders and organisations, alongside internal interviews.
The report recognises the extent to which Big Society Capital has significantly grown the size and breadth of the wider social investment market, both by creating new ways for investment to flow in and by crowding in other investors.
Social property funds have grown from zero to up to £2bn in 2018, and the UK charity bond market has expanded ten-fold to £369m in recent years.
In addition, BSC has made progress towards self-sustainability, and changing the narrative and understanding of social investment.
There were some issues that require further consideration, the review says, including around system change, relationships, and strategy and innovation.
The panel noted that “the social investment market is still maturing, and there are ongoing tensions between elements of BSC’s mandate to sustain its capital base and to invest in building the market”.
BCS recognised that some stakeholders felt its capital was priced too cheaply while others felt it was too expensive.
Aspects of BSC’s relationships with investors and investees could be improved, while the organisation should continue its strategy to invest in “innovative social investments” and consider “broadening its social impact focus areas”.
In a letter addressed to the BST, Sir Harvey McGrath, chair at BSC, welcomed the review and acknowledged both the progress made and areas for improvement.
He said: “I have set out the plan for how we believe we can respond as effectively as possible to the issues raised in this report. It is a starting point rather than a final document as we will be consulting widely to consider the best path on some issues.”
McGrath said BSC’s board will work with the executive team to ensure that a diverse range of views feeds into its decisions at every level, and described the organisation’s mission as a “work in progress.”
“An independent external perspective is enormously valuable to hold us to account, sense check our choices, and help us make course corrections for the future,” added McGrath.