Big Society Capital-backed social investment advisory group shuts down

A portfolio company of the UK’s largest impact investor Big Society Capital is closing down, despite being profitable, due to what its chair calls a “mismatch between supply and demand” in the market.

Numbers for Good provides advice and capacity building support to UK charities and social enterprises. It supported capital-raises for a number of social impact bonds and especially helped organisations tackling homelessness raise loan finance. Overall it has helped raise £6m of social impact investment.

But despite ending the last financial year in profit (£114,558 in financial assets), the board of Numbers for Good has taken the decision to cease trading on March 29 with a positive balance sheet and all creditors repaid. This includes a £250,000 loan from Big Society Capital.

Speaking to RI, Mark Hannam, chair of Numbers for Good said: “For the first six months of this financial year up to the end of January we’ve been profitable again. So we were money-making but there are a couple of issues within the social sector and charity space.”

Hannam, who has held senior roles at the Bank of England and Barclays Global Investors, says there is an oversupply of advice and capacity building compared to demand. “There are quite a few organisations that provide advice and they also do it as a wider part of what they do. So they are better diversified.”

Less government funding for advice and capacity building is also an issue.

Hamman says: “Before now a lot of organisations could bid for money through various schemes to pay for assistance and advice so lots of organisations got used to the fact they didn’t need to pay for advice.“So there is a culture in the sector thinking they should get pro bono advice.”

The potential perverse effect of government financial support for the social investment UK market is explored in a feature published on RI today.

“What you need for a healthy market is people that are willing to pay for good advice,” says Hannam. “It is a very young market and I think there is a mismatch at the moment between supply and demand. That’s a problem. It’s also true we’ve done some good work over the last 4-5 years and run profitably but you have to take a judgement whether long-term it is a viable market to attract good people into the sector and keep them there.”

“There is a culture in the sector thinking they should get pro bono advice.”

Claire Kearney, head of portfolio management at Big Society Capital said: “In this young market, it has been particularly challenging for advisory services as they seek to develop innovative partnerships to deliver social impact. We have enjoyed working with Numbers for Good and believe that their experiences will help to inform the wider sector of social enterprises, advisors, fund managers, and investors.”

Numbers for Good employed eight people. Its most recent work was research commissioned by the IKEA Foundation to analyse innovative finance measures that could be used to address humanitarian crises.