The social investment wholesaler Better Society Capital must address a power imbalance in the way it deals with organisations it supports and tackle a perception that it is not open to feedback, a review has found.

The organisation was the subject of the independent review by its parent The Oversight Trust, which conducts the exercise every four years. 

The review highlighted impact, sustainability, engagement and organisational challenges as areas BSC needs to develop in its next five-year strategy.

For organisational changes, the review recommended BSC addresses power imbalances in transaction, risk aversion and mistrust.

“Most intermediaries described in plain language their negative experience of power imbalance in their transactions with BSC and noted it as a feature they must live with, given the lack of other funders in the market,” the review said.

“Examples given range from a perception that BSC is not open to feedback, to its not valuing challenge as an organisation.

“Many co-investors and other stakeholders, including mainstream investors, expressed strong and similar views when commenting on interactions with BSC.

“Many of our interviewees were anxious about any negative comments affecting their future engagement with BSC.”

The review also highlighted BSC as being “removed from frontline realities” in some aspects.

“Many intermediaries expressed irritation that BSC does not appear to acknowledge the expertise and value of co-investors, intermediaries or the frontline social enterprises and charities who are the actual deliverers of social impact,” the review said.

The review found “mixed reactions” to the impact of BSC equity, diversity and inclusion policies on “moving the dial on systems-level diversity”.

“Some intermediaries welcomed the challenge from BSC to focus on EDI in onward investments, appreciating the shared best practice and frameworks BSC brings,” the review said.

“Others felt the requirements were unnecessarily burdensome (often in relation to additional data reporting), lacking clarity about whether such policies are impactful.”

The review acknowledged BSC continued to have a greater gender/racial diversity of staff at the levels below the small executive committee (ExCo) level, which remains majority male and white.

“The long tenures at ExCo level reinforce the lack of gender and racial diversity and, as importantly, according to our interviews, the lack of alternative voices of influence at senior level,” the review said.

Better Society Capital said it would publish its 2026 strategy in late 2025, including a review of its target asset allocation and a renewed emphasis on its communication strategy to attract and support other investors interested in entering the impact market.

The social investment wholesaler said it aimed to replicate successful models of impact capital management with public bodies, explore innovative financing mechanisms, and ensure that operational costs remain aligned with long-term sustainability goals.

“Better Society Capital will strengthen partnerships with government, combined authorities and regional leaders to unlock more capital and catalyse social investment initiatives, particularly with local government pension schemes and institutional investors,” it said.

“Better Society Capital will explore mechanisms to gather candid feedback from stakeholders and investees to further embed equity, diversity and inclusion principles across its governance and operations.”

Stephen Muers, chief executive of Better Society Capital, said the organisation welcomed the review’s guidance on how it could improve its “complex dual mandate”.

He said: “The quadrennial review provides a thorough evaluation of our progress, and we are motivated by its recognition of the impact BSC has achieved in shaping the UK’s social investment landscape. 

“We are grateful to the panel for acknowledging the tensions between our mandate and the needs of the wider ecosystem. 

“We welcome their guidance on how we can evolve further to meet the challenges of our complex dual mandate, and the rapidly changing environment we operate in.”

Muers said BSC’s upcoming strategy for 2026 and beyond will outline these priorities and actions that align with its commitment to fostering market growth and ensuring long-term sustainability.