Social investor Better Society Capital (BSC) should be more transparent in its processes to have a more efficient partnership with charities, a watchdog organisation said.
Nicola Pollock, the Oversight Trust senior independent director, told Civil Society that BSC should be “a lot more explicit” and articulate its learning and experience more clearly.
“That would enable everybody, and particularly in the charity sector, to understand the opportunities but also the challenges of social investment and how that, therefore, affects the choices they make,” she said.
It will also enable them to work more effectively with their investees, Pollock said.
Pollock’s comments came after the Oversight Trust released its quadrennial independent review of BSC, which focused on impact, sustainability, engagement and organisational challenges at the organisation.
Meanwhile, BSC this week welcomed the government’s launch of an advisory group to promote social impact investing.
Challenges ahead
Oversight Trust’s review suggested that BSC should be more transparent about the choices it makes in building its social investment portfolios, especially on how it makes catalytic investments and supports fragile social investment intermediaries.
It should also articulate how it plans to remain financially sustainable for the future and develop a strategy to influence regional and national governments to further grant concessionary to support the not-for-profit sector.
The review found tensions at the company as it balances social investment delivery while generating sufficient returns to remain sustainable.
Since 2012, BSC has received £634m of investment from dormant bank accounts. It has helped the UK social investment market grow 12-fold in the last 12 years, to over £10bn, the review stated.
Oversight Trust chair Stuart Etherington said: “Alongside recognising its considerable achievements, this review highlights the challenges facing BSC over the next five years.
“The Oversight Trust expects the BSC board and executive to go beyond acknowledging feedback on its organisational culture and investment approach by reviewing the effectiveness of initiatives introduced since the 2020 review in order to develop an approach that will produce a positive change.
“The Oversight Trust recognises the significance of these challenges and stands ready to work with BSC to develop an action plan to tackle the specific issues which the review raises.”
BSC chief executive Stephen Muers said: “We are grateful to the panel for acknowledging the tensions between our mandate and the needs of the wider ecosystem.
“We welcome their guidance on how we can evolve further to meet the challenges of our complex dual mandate, and the rapidly changing environment we operate in.
“In our upcoming strategy for 2026 and beyond, we will outline these priorities and actions that align with our commitment to fostering market growth and ensuring long-term sustainability.”
Advisory group launch
On 3 February, HM Treasury and the Department for Culture, Media and Sports (DCMS) announced the formation of a Social Impact Investment Advisory Group to mobilise social impact capital more effectively.
As a member of the new group, Muers said: “This development reflects the government’s growing recognition of the vital role social impact investment plays in addressing the UK’s most pressing social and environmental challenges.
“At BSC, we are committed to working collaboratively with the advisory group and all stakeholders to ensure this initiative achieves its full potential.
“This is an exciting time for the sector, and we look forward to the journey ahead with great optimism and determination.”
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