In September 2016 in Tokyo, I was privileged to participate in a (very) small way in the cross party campaign to secure assets in Dormant Accounts in Japan for social innovation. In the UK the legislation locking Dormant Accounts has, since 2012, released over £1.2bn, much of which capitalised a market champion for social investment in the form of Big Society Capital (BSC). Resonance was one of the first organisations to manage investment from BSC in 2012. Back then BSC funds represented 80% of our funds under management; seven years later the balance is reversed. It’s not that BSC have invested less – quite the opposite they’ve now backed five of our funds – but we’ve seen the number of investors investing for impact building considerable momentum. Initially it was foundations and then local authorities, now we’re witnessing growing confidence amongst wealth managers and, as our products scale, institutional investors. Today BSC’s investments account for just 17% of our funds under management, a significant mark of success for the Dormant Accounts strategy as well as for Resonance.
Of course the supply of capital is only one element that enables social investment to be a transformational tool and back in 2016, I shared with our Japanese friends a lot about the ecosystem that was emerging in the UK: legal structures such as Community Interest Companies and Community Benefit Societies; tax reliefs like Community Investment Tax Relief and more recently Social Investment Tax Relief; technical assistance grants building capacity in social enterprises and helping them navigate transaction and contract hurdles.
So when, this month, as a guest of the Japanese Cabinet Office, I was invited back to Tokyo alongside other users of Dormant Account money from Canada and the Republic of Ireland, I was keen to see how the market has developed. Japan has appointed its own equivalent of Big Society Capital, Janpia, and expects to eventually channel approximately £600m each year to social innovation. Encouragingly, at the International Symposium I met many actors already investing into and advising on structuring solutions to the national (and some international) challenges facing Japan. I was also encouraged to find a genuine passion for impact-led investing and a commitment to measure and manage the social impact. There were distinct similarities with discussions I’d had a few weeks earlier in Venice. I’d attended a gathering of leaders from across Europe to grapple with some of the trends emerging in impact investing.
Hosted by EVPA, we shared our stories and experiences of the spectrum of capital where even within the impact investing world there are schisms. EVPA has settled on language with its membership focussed on, what they call, investing FOR impact as distinct from investing WITH impact. If debating definitions is helpful to you, do dig deeper here. I was however more interested in a conversation I had with the new chair of EVPA, Filipe Santos, Dean of Católica Lisbon School of Business and Economics, Portugal. The conversation centred on global trends he’d spotted 20 years ago with the rise of Social Enterprise and 10 years ago with the rise of Impact Investing. And so obviously we debated what the next 10 years might spawn. Filipe was clear that the next phase of social innovation was going to involve the application of digital power to social transformation. There are some great ‘tech for good’ businesses out there, but the area I think provides the biggest opportunity is the ability to have government quality micro contracts that have both person centres AND outcome dimensions.
As I got to explore in a session with a group of Japanese Cabinet Office policy makers after the symposium, there has been a lot of talk about ‘personalisation’ in social care contracting and also ‘outcomes’ based contracting. But these two attempts to granularity contracting are NOT the same thing. To do both at the same time would require an agility that surely no government contract could ever handle. Or could it?
I’ve witnessed Local Authorities write off millions as arbitrary sums simply because they cannot afford to review individual case loads; I’ve seen the NHS desperate to find a way to put people before the commissioning frameworks and the providers that deliver them.
But I’ve also seen the freedom to innovate for service providers that comes with outcomes commissioning; and the emerging convergence around how to approach impact management; an entire Local Authority attempt to define its commissioning frameworks in outcomes and I’ve observed some wonderfully effective contracting models putting heavy influence of both budget allocation and choice of provider with individuals, supported by their family and an advocate, itself separately commissioned to be independent of both budget holder and service provider.
There has been much eye-rolling hype about the power of the ‘blockchain’. Most of it feels more like gaming of the financial systems with imaginary coin bits. It’s not that I’m not a believer in the technology I just struggle to believe people can go to such lengths to create something that adds no real world value. So when I started coming across organisations claiming they’d harnessed ‘blockchain’ for social impact I was both sceptical and intrigued, as well as excited about its potential…
Does Blockchain technology offer a secure agile system to operate micro contracts at both a personal and outcome granularity?
Can we have an open ended contract that can be adjusted over time with:
1. Additional outcomes recognised
2. New donors / commissioners added
3. Adjustments to the rate card pricing
Could we actually involve the person being supported in the financial system?
Watch this space!
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Resonance Impact Investment Limited, a subsidiary of Resonance Limited, is authorized and regulated by the Financial Conduct Authority (FCA). Firm number 588462.
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