“Blended finance opened up the whole market”

Stephen Muers CEO, Better Society Capital

Better Society Capital (BSC) is the UK’s leading social investor, set up to grow the market for repayable finance that tackles social challenges. Since Access was set up a decade ago, the two organisations have worked closely to open up the social investment market to organisations that would otherwise have been excluded. BSC Chief  Executive, Stephen Muers, reflects on how that collaboration helped reshape how the system thinks about risk, equity and market design.

“Our mission is to increase the amount of capital invested in tackling social challenges across the UK. We invest our own capital and crucially, we enable others to invest alongside us to build a larger market overall.

“Originally, the market was pretty small - just a few hundred million in total. The number of organisations that could potentially use investment points to a market much bigger than that - but unless you have some form of subsidy, many smaller organisations struggle to access it.

“For social investment to work for many community-based charities you need grant funding. It costs more money to do lots of small loans to small organisations. The risks are higher and the limits to what they can pay are real. So the situation we saw was that the market was growing - but it was happening unevenly. 

“Our entire approach to blended finance came about through working with Access and it allowed us to reach organisations that had been excluded before. We’re not allowed to give grants ourselves and we have to meet a certain financial return, so the grants Access provides were essential to making the whole package work. They change what we can do within the same level of risk.

“A really big project we collaborated on is the Growth Fund. That has enabled social investment to reach organisations that wouldn’t have received it before in the thousands. Access has built capacity among some of the leading fund managers in this space and helped them flourish. I hear stories not only about the impact at the frontline but also about what it’s doing behind the scenes to strengthen the system.

“We’ve also been working in partnership on ‘Good Finance’ - a crucial set of resources that help people understand what social investment is, how you access it and what your options are. It was designed in consultation with the people who use it, we’ve evolved it based on their feedback - recently we developed a training course based on what charities told us they needed.

“Aside from developing funding packages and resources, we’ve been able to show joint leadership in responding to national problems and the changing external landscape. We’ve adapted quickly, offered flexibility, and delivered what people need at the time. 

“A great example of this is when we built the Energy Resilience Fund, which was a response to the cost of living and energy price spikes. It was a finance model which included a grant from Access, investment from us, and government funding we secured together - a new blended finance solution for a new problem.

“When the most recent round of dormant assets funding was being allocated, we actually asked government to give the money to Access, rather than us. Because without their grant capital, we can’t reach the organisations we need to. They’re essential to making the model work.

“In the long term there’s of course a lot of evidence that social investment models work, but we don’t just need to help hundreds of thousands - we need to help millions. The real impact is when we take what’s being done, learn from it and make it five or ten times bigger - because that’s the scale of the challenge. The work Access has done has been a crucial part of showing what’s possible and I hope they’ll continue to be partners with us on that journey going forward.”