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New research investigates socio-economic diversity in social investment

The various forms of repayable finance in the social investment sector play an important role in the social enterprise support eco-system, and can be vital for growth and development. However, the sector has been subject to scrutiny in terms of staff and portfolio diversity – particularly in terms of racial inclusion, and its ability to direct investment where it is most needed.

Our new report, published with the London School of Economics and supported by the Connect Fund, uses elite education as a proxy to investigate aspects of diversity not yet well analysed in the sector: socio-economic inclusion, and the role of power and privilege among those who work for social investors.

 The LinkedIn profiles of individuals working at social investment institutions were used as the main source of information to inform this research. Findings showed that 19% of employees had studied at an elite university with 12% of those sampled having studied at Oxford or Cambridge, more than ten times that of the UK population. Elite-educated employees represent a higher proportion of employees in social investment organisations than in the population in general, and a similar proportion to those in the mainstream investment sector.

Given the variety of types of social investment providers, the research looked at the educational background of staff at different sorts of investors – with venture capital investors and social investment ‘wholesalers’ containing the highest proportion of individuals with an elite education, while social banks and Community Development Financial Institutions contained the least.

The education of social enterprise leaders themselves was also studied, with analysis suggesting that being privately educated did not mean you were more likely to access funding or finance. However, interviews with those working in social enterprises who attended a state secondary school raised the need for investors to have a better understanding of working-class businesses in working-class communities.

Whilst many social investors are taking steps to address imbalances in terms of diversity, it is important that the role of socio-economic advantage is incorporated into this work, so that investment can be better directed to people and communities that have been historically disenfranchised.

The research was supported by the Connect Fund