Sir Ronald Cohen: The empty kettle of social investment

It's about an invisible heart.

So invisible, in fact that a PR campaign is required to let others know about it:

 

It wouldn't be accurate to paint Sir Ronald as the original one percenter, though he was perhaps one of the first to be identified when as Gordon Brown's advisor, his concealment of status drew some attention.

." Gordon Brown won't get a grip on rich men's tax-dodging when close adviser Geoffrey Robinson used offshore trusts and Sir Ronald Cohen [who bankrolled Mr Brown's leadership campaign] conceals whether he is domiciled in Britain for tax purposes.'

Around the same time there had been questions about his Portland Trust charity which had paid half its income to Cohen's Apex Partners  and staff salaries averaged £100,000.

This kind of "circular economy" with a very small circle is a familiar scenario where we'd been working in Ukraine. In the article Ukraine's Scrooges, Kyiv Post had exposed how the most greedy of oligarchs self ascribe the role of philanthropy through similar short circuiting strategies. One even chairs the Davos Philanthropic Roundtable,     

Back in 1996, P-CED's founder Terry Hallman drew attention in his seminal paper to both the moral and strategic case for tacking the problem of poverty. He warned of the risk of uprisings  and in 2004 it was a message he brought to the UK with a business plan, having by then left behind a successful microenterprise development project in Russia.        

"When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode."

By 2009, even Sir Ronald Cohen had got the message when he warned that inequality could lead to rioting in the streets.   

This wasn't the only "coincidence"

Back in 2004, the strategy proposed was that which had proven successful in Russia, A community development bank which put funding in the hands of those needing it most, supported by business which re-invested at least 50% of profit in stimulating the local economy.

In a 2003 proposal for averting terrorism in a peaceful Muslim community, it was described like this  

"I proposed a strategy for this starting phase: at least one enterprise in a community, the function of which is to provide profit to be used in the community to grow more businesses. Most of the net profit from this community-funding enterprise would be placed into a community development fund such as a credit union. The balance of profit is invested into the business for growth. The community fund is then used by people who have most need, rather than the conventional practice of returning the money to the pockets of only a few people. Those few people tend to become wealthy to the point that they do not actually need more money, while many people in any given community probably do need the money. In this regard, this strategy of directing profits for use by people who have the greatest need might be called “social capitalism.”

It's interesting to note that later when a social enterprise investment strategy is proposed for Ukraine, there is an emphasis on grass roots focus and oversight:

"Project funding should be placed as a social-benefit fund under oversight of an independent board of directors, particularly including representatives from grassroots level Ukraine citizens action groups, networks, and human rights leaders. "

In contrast, by the time we got Big Society Capital, social investment "intermediaries" can be seen as a mechanism to bypass such transparency. Les Huckfield does a good job of illustrating what that has left us with.

Unlike a business which invests directly in stimulating the social economy, Big Society Capital is the re-direction of funds via intermediaries  from dormant bank accounts, propped up by further public funding. It's little wonder that they want to keep social investment among close friends and are desperate to keep others away from the table.

In August 2010 we described our plans to transition institutionalsed childred to Axiom News, who reported.:

"Hallman is currently investigating the setup of a multi-million dollar fund offering split financial ROI if needed, that is, a portion to investor(s) and the remainder to P-CED.

The funds will be directed to concluding a project in the Ukraine which involves funding the training of residents to develop social businesses. Included in this work is supporting children who have disabilities, many of whom have been left to die in secretive locations. P-CED is helping to move these children to safety and give them access to modern healthcare."

Not too many hearts were showing then, before the Social Impact Bond existed 

Today, Sir Ronald talks of replacing "the invisible hand" with "the invisible heart " reflecting what was said almost two decades earlier, in a proposed alternatve to traditional capitalism:

3. Adam Smith’s 'invisible hand' does not mean 'non-existent', nor detached.  It means what it says: invisible.  That is, not observable.

24. Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings.  Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion.

THis PR campaign is really a contemporary intepretation of the Tin Man from the  Wizard of OZ.

"No Heart. All Hollow!"

"When a man's an empty kettle, he should be on his mettle and yet I'm torn apart,  

Just because I'm presuming that I could be kinda human, if I only had a heart"