OXFORD, England (Thomson Reuters Foundation) - Financial return and social performance need to be linked to make headway in solving the world's problems, the head of an international taskforce set up to grow social investment has said.
"Equality of opportunity is an empty slogan nowadays," Ronald Cohen, chairman of the Social Impact Investment Taskforce, told delegates at the opening of the Skoll World Forum on Social Entrepreneurship. "We need a revolution in how we tackle social issues, or we will lose our way as a society."
The birth of social investment bank Big Society Capital in 2012 and the launch of the world's first social impact bond in 2010 had been a breakthrough in Britain, Cohen said. Social impact bonds use private capital to fund social programmes that governments might not otherwise be able to afford.
“The breakthrough wasn’t the social impact bond itself,” Cohen said on Wednesday evening. “It was saying we’ve always presumed that you can’t measure the performance of a social organisation – and that is why they have had to rely on philanthropists.
“The linking of social performance and financial return is the key to the revolution, the key to the capital markets, the key to giving social entrepreneurs access to capital on the same basis as the for-profit entrepreneur."
Many people were left behind as governments squeezed budgets as a result of the global financial crisis, Cohen said. In Britain, spending on social services had remained flat since 2008, he added.
“We’ve heard a lot about the invisible hand of markets. Let’s hear about the invisible heart of markets to help those whom the invisible hand has left behind,” he told the audience.
The Group of Eight (G8) most industrialised nations launched the Social Impact Investment Taskforce last June to help foster a social investment market, defined as buying into companies that aim to achieve a measurable social or environmental impact as well as a financial return.
The taskforce aims to report this year on a policy framework that would allow a standardised approach to measuring the social outcomes of impact investment, and methods for foundations, institutions and individuals to invest.
Ronald Cohen, founder of Social Finance, the organisation that developed social impact bonds, is also known for his work in private equity and venture capital, having established one of Britain’s first venture capital firms.