“Social Investment in the UK will come of age when dependency on the market champion ends.”

During his recent trip to Japan to share the UK’s Social Investment story with Japanese social impact innovators, Daniel Brewer discussed how Japan can learn from the UK’s pioneering experience and perhaps do things a little differently.


As a non-economist, I’ve always been intrigued with the diversity of opinion about the Japanese economy.  Until some of the investment world was caught out by the illusion it had built for itself, all I had ever heard of the Japanese economy was derision and failure.
Then after the 2008 global economic crisis set in, I heard at least as many commentators hailing Japan as the great success story of how to navigate the economic plateau and avoid the feared collapse; a model for the UK and others to follow.

It had always struck me as pretty impressive that a relatively small nation (just twice the UK’s population) boast the world’s 3rd largest Gross Domestic Product (GDP).  But its growth had stalled and interest rates were non-existent; the world looked on pious and a little sorry for them.

An island nation like our own, pioneers of innovation and engineering (study of Japanese engineering formed a significant part of my engineering degree), I have always been fascinated by Japan and the world’s insatiable appetite for their brands.  But they have a complex history, socially, economically and globally and have had to live post World War Two with a narrative that portrays them as both perpetrator and victim.

It was a great privilege to be asked to speak at the Nippon Foundation’s inaugural Social Innovation Forum and I was intrigued to understand what I could learn from mixing with 2,000 Japanese social innovators converging in Tokyo at the end of September 2016.

It’s a mixed blessing being a pioneer; if you succeed and others follow you are (sometimes) hailed as a hero but, whether its recognised publicly or not, without a doubt you have more scars than medals to show for it.  Japan is one of six other nations actively building their own version of the UK’s Big Society Capital – the social investment wholesaler and market champion.  I was in Tokyo to share Resonance’s story of rapid growth and how we have used Big Society Capital’s dormant bank account funds.  I wanted to encourage the Japanese government and social innovators to follow the UK’s pioneering trail and to learn from the many things we as a sector would do differently, if given a chance to re-launch our sector champion.


Sharing a platform with the CEO for the Japanese Association of Fundraising and three Japanese politicians who were mapping out the future for social investing in Japan, it was my job to bring the reflection on what has been possible so far in the UK.  In our rush to progress, in my opinion, reflection is not valued enough. Reflecting on this occasion, I realised not only how far we had come as an organisation, and how the UK’s Social Investment eco-system had developed over the past 14 years since Resonance was founded, but also that behind each significant step there was a pioneering individual.  Every time I hear Sir Ronald Cohen compare the growth of the Social Investment industry to how he and others built the Venture Capital industry, I am inspired anew that this is a mountain we can climb, and are climbing.  His quiet commitment to this sector has been truly significant: the chair of the Social Investment Task Force, a founding influence of Bridges, Social Finance, Big Society Capital and convener of the National Advisory Boards for social investment in numerous countries around the world.  But as I told the UK’s story, I noted others that I also count as some of the last decade’s market shapers with their contributions:

Stephen Lloyd’s and Sara Burgess’ to the design and successful roll out of the Community Interest Company; Toby Eccles’ to the dawn of the global movement that is mostly known as Social Impact Bonds; Tim West’s to the first real moment of public acceptance of Social Investment in the UK through the convening of Good Deals; Mark Campanale’s to the foundation of the Social Stock Exchange;  Danyal Sattar’s to the establishment of the Social Impact Investor Group – now a 130 strong group of charitable foundations exploring impact investment opportunities; Nick Hurd MP and Nick O’Donohoe’s to the establishment of Big Society Capital; Neil Pearson’s to the implementation of the world’s first Social Investment Tax Relief and Jamie Hartzell’s to the formation of Ethex, which at the last count had mobilised nearly £50m of capital into 55 social enterprises from nearly 10,000 retail investors.

Amongst these folk, and many others which have contributed, are lawyers, bankers, MPs, social entrepreneurs and civil servants and the point is not so much that these individuals are heroes, because of course all of these achievements (and many others I’ve not listed) involved teams of people, but that there are many contributors to what we now have as an effective (however imperfect) social investment eco-system.  Perhaps being a pioneer is not as lonely on reflection.

My encouragement to the Social Innovation Forum in Tokyo was to recognise that access to dormant bank account money is just one piece of the jigsaw, an important one, but on its own it is unlikely to be enough.

Whilst I was honestly able to share how Big Society Capital’s existence has without doubt stimulated the market and made a real difference to our own growth, I also warned against expecting too much of their wholesaler. The real success of their dormant bank account funder will be judged by its eventual ability, at the right stage of market growth, to step back and let mainstream capital step in. It can’t be an effective market stimulant and forever be the only impact investor of scale.  Big Society Capital has backed five of the six funds we operate, and we manage more of their money than any other fund manager.  But five years after they made their first investment decision to back one of our funds, we’re now working towards a future where Big Society Capital are becoming only one of a much wider universe of investors accessing our funds. The UK market is ready for other impact “funds of funds” – the encouraging thing is that we know of at least two in development.

Profit through purpose