With strong support from Government and stakeholders across sectors and markets all talking about the Impact Economy, it feels like we may be at a tipping point when impact can move ‘from margin to mainstream’. We felt this, for example, in the sheer scale of the Beacon Forum, which we attended earlier this year. At Bates Wells, we’ve long supported organisations that prioritise public benefit over private gain, but it’s exciting to witness this current momentum. Against the backdrop of an increasingly uncertain world, this focus on collaboration, community and positive impact is revitalising, and we wanted to share our thoughts on some key themes of this momentum.
Social investment, rooted in the community
What comes next? On the one hand, we must carry on the work that we’ve all been doing. Although we have encountered some hesitation, particularly for trustees who may still feel more comfortable with grant funding, there are now many examples of charities engaging with social investment in innovative ways. We’re working with foundations that are moving into social investment, including some taking an impact-driven approach to their endowment investments. We see this as an exciting area for growth, as indicated in a recent report from the Impact Investing Institute and Access, which analysed how UK foundations and trusts are aligning their investments with their missions.
What’s crucial is that actions are rooted in the needs of the community, with collaboration as the key. To help funding get to frontline organisations in the right way to support their impact, we’ve been working with clients who are reconsidering the traditional power dynamic between funders and their investees and grantees, which shapes many aspects of the funding arrangement. For example, whether the allocation of risk is disproportionate, creating a power imbalance between funder and recipient. Emphasising trust between the parties, rather than defaulting to funder control, can better support impact, potentially including allowing greater flexibility in the recipient’s use of funds and reporting requirements and, in the case of investment, in the approach to taking security. Social investment is fuel for the Impact Economy, and we need to keep innovating and improving the way we work together in deploying that capital for best effect.
Local organisations are keen to do the work. There is evidence that Pride in Place funding from the government is starting to direct money to where it needs to be, and the government’s new Our Place to Give initiative is intended to connect philanthropists with local initiatives across the country. We’ve been working with local authorities that are getting money into place-based initiatives through dedicated funding programmes. Whether it’s creating a community wealth fund for investments or grant programmes that target key social issues within a specific area, there are plenty of examples of localised finance innovation to build upon. Also, opportunities to scale collaboration between sectors to deliver public benefit are presenting themselves, such as through Social Outcomes Partnerships (SOPs) and the Better Futures Fund. The UK led in developing the SOPs model and we expect to see that continuing to evolve to facilitate more place-based solutions.
Working across the sector, and wider influence
In addition, there is now a renewed focus on helping different Impact Economy participants to work together with government effectively – communities, charities, social enterprises, investors and philanthropists – a goal for which the Charity Commission and Chief Secretary to the Prime Minister, Darren Jones MP, have expressed clear support. The Office of the Impact Economy is a lynchpin of government plans in achieving this, which is expected to publish its new strategy this year, and the Impact Economy is being recognised as a sizeable and important part of the wider economy.
We expect to see further development within the purpose-driven business space, including for social enterprise, cooperatives, community-based businesses, and B Corps, and we hope that the wider economy will draw on the approaches being developed by these organisations. Some have already been breaking the mould by exploring models of governance and ownership that embed purpose-beyond-profit and, for example, put ‘Nature on the Board’, reflecting the fact that a healthy planet, society and economy are interdependent. High-profile examples of such innovations have attracted mainstream attention.
We also anticipate continued growth in the regenerative business space and in the ‘circular economy’, particularly with the government due to publish its Circular Economy Strategy in the autumn. We see a wide range of innovative, impact-driven business models among our clients. Whether its sustainable fashion, the ‘blue economy’ or place-based impact investing, different themes can cut across sectors and draw together different types of participants. A collaborative, impact-focused ecosystem has the potential to disseminate new ideas and best practice, helping to bring impact into the mainstream.
While, in some ways, the world now seems like a more challenging place, we’re feeling optimistic. We’re very much looking forward to working with our clients and contacts in harnessing this energy, to continue to develop the UK’s Impact Economy.
This summer, we’ll be carrying on the conversation on these topics, and many more, at Bates Wells’ annual Be More Radical gathering on the evening of 7 July, bringing people together from across the Impact Economy on our rooftop garden in London, overlooking the Thames. Our theme will be ‘The Impact Economy: From Policy Signal to Market Reality’. We’ll hear insights from a selection of inspiring thought-leaders, including Heather Davenport, Interim Director of the Office for Impact Economy at the Cabinet Office; Mathu Jeyaloganathan of Camden Community Wealth Fund; Karl Harder of Abundance Investment; and Matt Parfitt of Grace Enterprises. There’ll also be plenty of time for making connections across the wider impact community, with light refreshments. If you’d like to join us, please register your interest here.