vested. Shifting power in social investment?
What does it take to move the dial?
In our last project blog, we shared some motivations behind ‘vested.’, which is bringing people close to the impact of social investment decisions into the heart of those decisions themselves.
As we’ve been bringing the project to life, we’ve been thinking about how power shows up in the sector and what it would mean to turn the dial here. We want Vested to do some of that work.
To help us think through these issues, we took this topic to our first Learning Consortium — a collection of social investors interested in our emerging learnings and in challenging how they make their own decisions to deliver greater power to communities across the UK.
Here are two central insights from our first meeting, and how they’ve helped us shape the project.
- Power is diffuse — it’s not all in the “signing off” of a deal.
When seeking to reshape power within social investment, it’s tempting to think that the critical issue is to change who has the “final say” on whether or not money goes out the door — to give this say to a different group with different values.
We think there’s huge merit in this, but discussion in our consortium has reinforced our belief that it can also be a red herring. Focusing on changing who has a final say can distract from the enormous range of steps leading up to this point — steps where serious power is also in play.
As the Foucault line relates: “power is everywhere”. In the world of social investment, this means that it’s not just something wielded by those signing off on an investment deal. It’s present in everything leading up, including decisions about:
- what and who we are looking for
- how we do our outreach
- what our applications look like
- how we assess good leadership
- what counts as “evidence” of an organisation’s ability to deliver a return
That’s to name just a few. If we give people a final say on deals being considered, but all the above issues are already decided, then the potential to deliver different decisions for people brought in to do that can feel very limited. We’ve seen this first hand in the sector, where people with under-represented lived-experiences are brought into systems they have little control to shape.
For example, we see many trusts, foundations and funds trying to diversify their investment teams and committees to make them more representative of the communities they are trying to impact. Or they are consulting with lived experience and impact experts in their decisions. Doing this, they are trying to ensure that fund decisions incorporate the views of those close to the impact (or at least taking them as inputs) to support different decisions.
But this assumes that these people are coming into a neutral space, where they can influence decisions unaffected by the existing norms and incentives in that sector. Most often, we’ve seen that such people end up quickly limited by the structure of the funds they are working in, the process in place for assessing organisations, the return profile they expect to see on various products, and other ingrained processes or metrics that together incentivize them in a largely financial direction favouring “more of the same”.
Because of this, vested. is not parachuting people in at the end of a long and established process to make decisions. We’re convinced that our panel needs to design their own process too:
“It sounds obvious, but everything around us is the result of design. Even the way we work in the social investment sector is ‘designed’ through a series of conscious and unconscious choices made under a framework of values.” — Ruby Frankland — Connect Fund Manager at Barrow Cadbury Trust
Giving people the mandate to design things is giving people power. And we want to channel much of the power we’ve been given in designing this pilot directly to the vested. panel.
This is shaping the way we’ve agreed on our project parameters. It means we’re going to focus on learning how to innovate and shift power across the broader investment process, rather than on adapting just its final steps. We can’t involve our panel in everything across this process, given cost and resource implications of providing adequate support around each step (and questions over how much they actually want to be involved in — see point two, below), so we have to be targeted to some extent. Nonetheless, this focus upon steps earlier in the process is characteristic of the Vested model.
In practice, this means that the vested. panel will have agency to shape and implement a process for making investment decisions that feels right to them, setting criteria and shaping due diligence, working alongside and with the support of the Trust for London and Shift teams. But once their decision is made, vested. will mirror Trust for London’s existing process. Here, deals are taken as recommendations, to the board, and the board then checks if those deals align with Trust for London’s charitable mission and legal requirements.
Making such a model work will require being totally transparent with the vested. panel about this decision — that the board, as guardians of the endowment with their own mandate and responsibilities, can decide not to enact the panel’s recommendation. Though this would only be done with serious consideration, and with a strong rationale.
This approach has its risks. For example, not giving the panel “ultimate” power risks undermining the sense of agency in the group. However, we believe that this can be mitigated so long as we:
- Clearly articulate the power that the panel does and doesn’t have
- Build communication and accountability channels between the panel and the board
- Reinforce how our approach protects the panel’s ability the make decisions aligned to their values
- Frame this pilot as part of a broader effort to re-balance power in the investment sector
This brings us to the second main rationale for taking our chosen approach.
2. Devolving power for its own sake is still not accepted in the social investment sector
Despite compelling arguments for sharing power that herald a more democratic, connected and empowered society, our consortium revealed a shared conviction that these alone won’t turn the dial in a sector where more measurable outcomes are central. New approaches must demonstrate things speaking to the everyday motivations of those in the sector — more diverse investment and impact, wider reach, and progress on metrics already in place and emerging.
This is understandable. People won’t rethink their investment approach without clear benefits against outcomes their roles exist to protect. They’ve accepted a mandate to uphold the mission of their organisation, so need clarity on how innovations can better serve that mission.
This is why we’ve made learning a central focus of our project. Though we’re piloting something that sustains a role for traditional decision-makers, we’ve focused on creating the space to surface:
- How participation can be built into social investment in sustainable and scalable ways (e.g. what support will people need to participate confidently?)
- The benefits to pipeline and portfolio available through participatory approaches (e.g. what are the different kinds of impact or demographics within investment made?)
- How to ensure communities feel more involved, engaged and confident in decisions about where money is invested (e.g. how trusted and powerful do they feel?)
In doing this, we’re trying to bring the sector alongside us. Taking a pragmatic approach to shifting power, seeking reform over revolution, we’re showing a belief in the importance of dialogue and the potential of the sector to evolve. Other actors are pursuing more radical approaches, as with Lankelly Chase’s recent decision to abolish itself. Though it’s not clear to us yet that these approaches are the answer (see here for a contrasting case for the existence of foundations).
This speaks to a final benefit of our model. By retaining a role for the Trust for London board, we lessen the burden and pressure on the panel to get things right immediately. This recognises that not everyone wanting to participate wants “ultimate” power (both right now, or in the future), or has consented to the responsibilities that come with that. We know that a lot of the leg work involved in getting deals to committee can be quite mundane (for instance, some people won’t have much enthusiasm for financial modelling) so we need to explore roles and options that fit people’s desires and capacity — and this is what we’re exploring in vested.. Doing participation in a way that people understand, consent to and, crucially, feel ready and equipped to be part of, requires time and care to establish. Without this care, we risk setting people up to fail and demonstrating the impossibility of the very participatory approaches we believe in.
What’s next for us?
As we take this pilot model forwards, here are two big things we want to learn about:
- What are the right channels for surfacing and sharing learnings about power that can build solidarity across different stakeholders? We’re recruiting people with lived experience into our Learning Consortium right now, and building channels between the Trust for London board and the Vested panel. We think having channels to share how people are impacted by and using power is crucial, to build mutual understanding that can drive us and the sector forwards. We’re keen to hear how others are doing this effectively.
- How can we facilitate sessions for the vested. panel in a way that protects their agency and sense of power? We’ve been trying out different ways of making decisions before agreeing which feel most appropriate to the panel themselves in phase 2 of the project. We’ll also be building in reflection time with our panel to surface how able the panel feels to shape the process, to say “no”, and what role they would like Shift to play to support them in this. We’d love to hear from others who’ve also reflected on these points.
We’ll report back against these later in November, sharing more about our first set of panel sessions. We’ll also share a little more about how we’ve recruited the panel, and the benefits and challenges of our chosen approach here. So stay tuned and be part of the conversation.
