Real inclusion should look like a rainforest - diverse voices, diverse finance

Bonnie Chiu Co-founder of the Diversity Forum and Pathway Fund

Bonnie Chiu is a leading voice on equity in the social investment sector, and co-founder of both the Diversity Forum and Pathway Fund. Over the past decade, her work has helped push equity from the sidelines into the heart of funding in the social sector. 

“I first encountered the UK’s social investment sector as a social entrepreneur newly arrived from Hong Kong. I studied business but I did feel the language around social investment is very technical with a lot of discussion of the what and how, but not the why. It was mostly men on stage talking about social investment and at first, I felt daunted.

“Each social investor was very prescriptive and there were so many boxes to tick. I didn’t fit into those boxes and it was alienating. My own experience of trying to access finance led me to realise that if anything was going to change, I would need to get inside the system. I needed to influence it to make the journey better for others like me.

“I began to see that my experience was far from unique. There are a lot of ‘reluctant’ social entrepreneurs -  people who didn’t set out to start a business, but were compelled to because of their personal experiences. And they often come from marginalised backgrounds. Fundraising is one of the hardest things for them. 

“What I saw was the stark difference between the social investors and those seeking funding. I had an opportunity to speak at a sector-wide conference and highlighted the problem of diversity, equity and inclusion in our sector, and that we needed to do something about it.

“I very much found a willing partner in Access, which has an explicit mandate to make finance fit for purpose for charities and social enterprises. Over the past ten years, they’ve never strayed from that core mission. They’ve kept themselves small and are always focused on serving the sector. They also understood it’s not just about the end product - whether a loan is cheap enough - it’s also about having infrastructure that allows the field to thrive. 

“The Connect Fund really brought a lens onto the need to support marginalised communities, And it formed initiatives like the Diversity Forum and Pathway Fund that might not have got off the ground otherwise. All social investors now have a DEI policy and have made improvements to their processes. 

“Access doesn’t just fund the work - they’ve signed up to the manifesto, they publish, they’re independently reviewed. It’s important that they don’t just preach to others, but do the work themselves.

“But progress still has a way to go. I often say that diversity is counting the numbers. Equity is making the numbers count. I think we’ve got the diversity right and there’s awareness of the issue. But I’m not sure we’ve got to equity yet because it requires us to rethink some of the fundamental logic around investments.

“The social investment sector is always reaching for technical solutions thinking ‘if we can make this cheaper, maybe things will be okay. Or if we provide different products - let’s blend this, blend that.’ When actually it is a human problem related to our mindsets and biases. I don’t think the social investment sector is as good at grappling with some of these issues.

“Power is really at the heart of what we need to get better at. Money is power. But it’s just not the norm to talk about it. In philanthropy there’s lots of discussion about shifting power, I just don’t see those discussions in social investment. It’s not just the head - we need the heart as well.

“Real inclusion means building an ecosystem that reflects the full range of needs and voices, like a vibrant rainforest with lots of different types of trees and animals. There are enterprises that want to grow quickly - for them, equity financing might be really helpful. Others have more stable, profitable business models, where debt is more appropriate. We need a wide range of financing.

“But it’s not just the products. The investors should come from a wide range of backgrounds too. Most social investors are bankers, not entrepreneurs. And very few of them have lived experience of the issues they’re trying to fund.

There are attempts to include social entrepreneurs - maybe one person on the board out of ten. But that’s cherry-picking. It’s not consistent inclusion or enough to shape direction. You can’t just do it once and then forget about it. You need those voices at the table all the time.”