This article first appeared in ICAS’ CA magazine.
If you were living in the UK around the time of the 2010 general election, you’ll be familiar with the term Big Society. Launched into our lexicon by David Cameron’s coalition government as a visionary socio-economic ideology that promised to do nothing short of revolutionise the way the government funds communities and connects private capital and social projects, Big Society was a neat way of packaging a strategy for long-term change.
But the concept, if not the brand name, pre-dates Cameron. The idea of social investment, says Mauricio Preciado-Awad CA, is actually from the Gordon Brown era. “It’s a common misconception that Big Society Capital was David Cameron’s idea,” he says. “It was an idea that already existed. Cameron simply gave it a different name – Big Society – and made it part of his agenda.”
As Investment Director at Big Society Capital (BSC), an organisation launched as a limited company by, but independent of, government to kick-start funding and investment in social enterprises and not-for-profit groups, Preciado-Awad is mindful of the association and keen to point out that BSC continues to enjoy broad cross-party support.
Established with funds from dormant bank accounts and building societies, BSC also operates with equity investment from Barclays, HSBC, Lloyds and NatWest. Just over £400m of its £600m investment pot comes from dormant accounts. Preciado-Awad likens this base fund to an endowment, providing the security to be able to try new things, to experiment and take a long-term view.
Money in English accounts that have had no activity in 15 or more years are considered dormant and, if the account holders can’t be traced, are eligible to be collected into the Reclaim Fund, a scheme which then distributes funds to organisations such as BSC. “It’s quite costly, because of regulation, for banks to have that money just sitting on the balance sheet,” Preciado-Awad explains. “So the government said, ‘Okay, we’re going to take that money, put it in a separate scheme and then give it to certain causes.’ And then more money keeps coming into the scheme from the same sources.”
Legislation set to be passed this year will target not just cash, but other dormant financial products such as life insurance, shares and investment trusts, expanding the fund and ensuring its longevity.
“One of the things I love about this organisation is that it wants to create the market, not be the market,” Preciado-Awad explains. “So everything we do here is about opening the door for others to come in. We’re constantly asking ourselves, ‘How can we make these markets more efficient, more effective and bigger?’”
And the markets are bigger. In eight years, from 2011 to 2019, the social investment market in the UK grew sixfold, from £830m to £5.1bn. Preciado-Awad says that BSC’s goal is to get to “around £10bn to £15bn by 2025”.
Welcome home: impact investment in action
In terms of wide-reaching socio-economic impact, reducing homelessness carries enormous benefits. From tackling unemployment to managing addiction and health issues, helping rough sleepers off the street and into sustained tenancies means brighter futures for individuals and communities and less strain on social services.
With funding from Big Society Capital (BSC), Greater Manchester Homes Partnership (GMHP) provides rough sleepers with the practical and emotional support they need to get into housing, access training opportunities and find jobs.
From 2010–2015, Greater Manchester recorded significant increases in entrenched rough sleeping, with a rise of more than 900% in Manchester itself. To date, GMHP has helped 447 rough sleepers into its programme, and more than 300 have sustained tenancies for six months or more. During the pandemic, GMHP quickly adapted its service-delivery model, making sure every participant had access to a mobile phone and credit as well as household essentials and support services.
GMHP is just one social housing initiative supported through BSC. An astonishing 32% of homeless women say that domestic abuse contributed to their homelessness, and finding affordable suitable housing is a significant challenge.
BSC wanted to understand and address the specific housing needs of women in challenging circumstances. Following a survey of 60 women’s sector organisations, it co-developed the Women In Safe Homes Fund, which helps to acquire properties to lease to providers of housing and support for vulnerable women and women fleeing domestic abuse.
Much of that market-creation strategy is underpinned by its operational model. BSC invests funds with intermediaries – fund managers – who then invest in non-profits and social enterprises. Before its creation, there was only one social impact fund manager in the UK with more than £50m in assets; now there are 13.
“Something that’s becoming quite popular at the moment is social outcome contracts, and the flagship case study for this is HM Prison Peterborough. The prison needed funding to introduce a programme to reduce re-offending rates. Only government can fund that kind of scheme. But government may not want to take the risk on outcomes that may or may not be positive – it might work, it might not. So the solution is to find a social investor who engages a charity to deliver the programme. And the government only pays if the work gets delivered. It means the risk rests with the investor, not with the government.”
This is just one example of what Preciado-Awad calls a “trilingual” approach. “By trilingual, I mean talking to investors and commercial investors, talking to the grant sector and talking to government,” he says. “And government is quite an essential part of what we’re doing, because a lot of regulation is needed to support the social enterprise sector and to increase the flow of funding to organisations. I think what we do at Big Society Capital would have been harder or taken longer if it had been administered by the government. But we do absolutely work together and have the same goals for making a difference.”
Impact assessments are key to every single deal that Preciado-Awad works on or manages. He relies heavily on BSC’s impact team, who collect information and analyse the data that sells the social and commercial benefits of the organisation’s success stories to potential investors. “Our intermediaries publish impact reports, and we publish an impact report as well,” he says. “It’s essential to what we do, and it proves that what we do is working.”
A sense of responsibility for giving back is something Preciado-Awad says is in his DNA. “I think the fact that I’m from Latin America [he was born in Colombia] gave me a sense of social justice from a young age. But I wasn’t actively conscious of it until I started my career.” He studied economics and management at the University of Bristol before joining PwC in 2005, which is where he qualified with ICAS. He recalls his time with PwC fondly but admits with a laugh that “being an auditor and checking someone else’s work was not my definition of fun! I learned a lot but I felt something was missing.”
Preciado-Awad left PwC to run Theatre Deli, a social enterprise which turned disused buildings around London into theatre and performance venues. While he found the work fulfilling, his lifestyle “resembled the life of a student, and I thought, ‘okay, this isn’t what I want either’. I was looking for something in the middle. I realised I wanted to dedicate my life to making the world better, eradicating poverty and bringing justice to those who need it most. And I wanted to do this in an efficient way that was actually making real change and was also scalable. Big Society Capital ticks all those boxes for me.”
In between Theatre Deli and BSC, Preciado-Awad spent eight years with Christian Aid, initially working in a “standard accounting role” before joining the team that supported the delivery of contracts for the UK government and the EU to develop governance in the Democratic Republic of Congo, Sierra Leone, Haiti and India. It was in this role that he gained an understanding of what it was like to work really closely with a team, “not just thinking about their reporting, but about how to efficiently use the money, about budgeting and strategically using funds to deliver programmes”.
It was during Preciado-Awad’s tenure that a team within Christian Aid decided to make an impact investment for the first time. “No one else in the finance team was interested in this opportunity, but I was. It started with one investment into a solar-panel initiative in Kenya. Then another working with a hibiscus cooperative in Nicaragua. Then a cocoa collective in Bolivia… that’s how I fell into impact investments.”
In the five years that followed this initial toe-dipping exercise into social investment, Preciado-Awad worked to make it a central strategy within Christian Aid and became a key player in running the organisation’s social entrepreneurship programme. This was followed by an initiative to create a platform that helps UK-based NGOs become investment-ready, for which he was both technical assistance and investment analyst lead. All vital experience for his current role at BSC.
His CA qualification has been crucial, he believes, in facilitating some of the opportunities he’s grabbed and run with over his career. “It’s a great qualification to set you up for life,” he says. “When I was part of the finance team at Christian Aid and this new initiative for investing in a social enterprise came up, one of the reasons I was able to get involved was because of my qualification. It means I look at accounting as more than just numbers. It’s about having a holistic approach to the commercial aspects, to strategy and to operations. It’s about asking what’s the business model, what’s needed for growth, what kind of investors do we need to engage? And also about bringing rigour to your thinking and your practice.”
In other words, for Preciado-Awad, bringing his experience and expertise to an organisation that can make a big difference to people’s lives is about big ideas, big commitment and enormous belief in the strength of numbers.
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