NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, October 27, 2014

In recent months senior figures in the world of charity have questioned whether social investment is good for the sector.David Ainsworth examines why this new field is facing a backlash.

Recently a lot of people in the charity sector have said they don’t like social investment. Kathy Evans, chief executive of Children England, gave the latest and perhaps the strongest critique last week, saying it was “absolutely the wrong thing” for charities. But she’s far from alone. A lot of senior people doubt its practicality, its morality, and its effectiveness.

There’s clearly quite a broad base of people who dislike the whole idea and feel the sector would be better off without it.

Even among those who promote it, there is a move to say that social investment is very important but that it’s “not for everybody”. Even its backers feel that this is an idea with a PR problem, as laid out last month by Clare Pelham, chief executive of Leonard Cheshire, who said many people felt “alienated” by the idea.

So can we really say social investment is a good thing or a bad thing? If it is a useful tool, who is it useful for? And why, with so many people trying so hard to sell it to the sector, does social investment have such an image problem?

I think we can group the objections to social finance into four main categories.