Social impact investment grows six-fold

Written by Lori Campbell on 14th Dec 2020

The UK market for social impact investment – which aims to improve people’s lives while bringing sustainable returns – has grown six-fold from £830 million in 2011 to £5.1 billion last year, a new report reveals.

The Social Impact Report, from Big Society Capital (BSC), shows the number of fund managers looking after more than £50 million in assets and investing in social impact has risen from just one in 2012 to 13 in 2019. The social housing investment market is now worth more than £2 billion, according to the report, while there were no such funds eight years ago.

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BSC – the world’s first social investment institution of its kind – has provided initial cornerstone investment into 44 new funds since it was founded by the Cameron-Clegg government in 2012. This, it says, has in turn given other investors the confidence to invest to make a social impact. BSC now works with 16 fund managers through its Growth Fund to reach 400 social enterprises and charities in the UK.

The report outlines how BSC’s equity investments in Unity Trust Bank and Charity Bank have helped to scale social banks, with Charity Bank’s lending rocketing from £40 million to around £250 million in 2019. It has also worked with mainstream fund managers such as CBRE to ensure that impact is at the heart of its funds. ​

Investment eco-system

BSC aims to build a thriving investment “ecosystem” that connects capital with social enterprises, charities and social purpose organisations to help tackle pressing social issues such as homelessness, poverty and domestic abuse. It works with fund managers and other intermediary organisations to invest in their funds, help grow their products and services and attract more investment.

Beyond investment, BSC offers support from advice for enterprises seeking investment to best practice for fund managers and investors, as well as helping government develop policy.

Responding to Covid-19

The global pandemic has caused people to fear for the health and economic wellbeing of their loved ones and themselves, and left social enterprises, charities and social purpose organisations facing an unprecedented challenge.

BSC has worked with the government and other partners to ensure broader support packages were available to the organisations it supports. This included working with a range of social investors, and the Department for Digital, Culture, Media & Sport (DCMS) to create a new £100 million investment programme for during the crisis and beyond.

It also worked with the Social Investment Business and other social investors to quickly establish a £25 million Resilience and Recovery Loan Fund. This made Coronavirus Business Interruption Loan Scheme (CBILS) loans, which are interest-free for the first year, available to charities and social enterprises.

The report contains more than 30 impact stories showing the ways in which social impact investment has enabled the social sector to thrive and grow – from creating more opportunities for children in West London, to securing housing for women fleeing domestic violence in Hull.