Social finance ‘absolutely the wrong thing’ for the sector says Children England CEO

Social finance ‘absolutely the wrong thing’ for the sector says Children England CEO
Civil Society, be Emily Corfe
Social finance is "absolutely the wrong thing" for the voluntary sector, Children England chief executive, Kathy Evans said yesterday. 


Speaking at an event on the future of the voluntary sector run by think tank Civil Exchange, Evans said the voluntary sector is the only part of British society not yet "saddled with debt" and that pursuing a social finance model could compromise the future of the sector.


Evans also said that the sector had become obssessed with winning tenders. She said charities which focused on making money were starting to "behave like Burger King" but that these charities risked losing everything which made them unique.


“For the British economy, the number one problem is debt,” she said. “The public sector is up to its eyeballs in debt, the private sector model is premised on debt and in large part, commerce is reliant on access to loan finance to produce its profit-making growth and our families in UK are up to their eyeballs in debt.


“The voluntary sector is one of the only parts of this society that is not reliant yet on debt but unfortunately we are being encouraged to consider debt in various forms, through social finance and loan finance as an advance on what we need to do. I am saying categorically I think that is absolutely the wrong thing to do.”


According to Evans, introducing debt repayments into the voluntary sector could lead to compromises being felt by beneficiaries. 


“If people are relying on us to be around for generations for help and for compassion, then to put what we do at risk of being reliant on debt reclaiming is unnecessary. It’s not part of our business model and it’s also very high risk,” she said. 


“The voluntary sector is not here to pick up the pieces, or to fill the gap, or to be cheaper,” she said. “It is essential to have some view of a contributory role that the voluntary sector has in a future economy – not simply finding ourselves in the midst of a problem and working out how to solve that.”


‘We shouldn’t focus on winning tenders’ 


Evans also said the sector had become too focused on winning government contracts.
She said the voluntary sector’s strength is its “frugal” financial outlook – one that differs greatly from any other part of the British economy.


“We have been making money out of people recycling their used books and clothes and we have some very conservative, sustainable instincts at the heart of what we do," she said. "Neither is reliant on consuming cash or our natural resources."


“Unfortunately the voluntary sector has been squeezed into the belief that markets are the best way to allocate resources – a view has prevailed in the public sector and the public marketplace for 30 years.
"So my sector has been increasingly consumed with the art of winning tenders. There has been a merry go round of changing from one provider to another provider on a two year basis.” 


Evans spoke of a contrast between the “core economy”  – work undertaken for free which Evan’s claims makes up two thirds of the overall economy – and the “cash economy”, which is “up to its eyeballs in debt”, according to Evans. 


The voluntary sector is the “converter between the core economy and the cash economy”, Evans said. 


“The voluntary sector can make money out of the love, connections, passions and frustrations of people about how they feel about their families and their communities," she said. "We can raise money out of things that nobody in the private sector can make a penny from.


"And we can turn that money into jobs that pay taxes, that raise budgets, that can add to the public sector. But that currency conversion can’t happen if we behave like Burger King. Nobody ran a marathon for Burger King. 


“That’s not the way people do it. So when we turn ourselves into something that looks more like a private company, we kill our business model."


Children England is the leading membership organisation for charities working with children, young people and families. It specialises in providing support to members and the wider voluntary and community sector.