Areas of investment

We separate the size of the market into four key investment areas, also known as our ‘market systems’ – Social and affordable housing, Social lending, Impact venture and Social outcomes contracts. Find out more about our market systems approach.

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Social and affordable housing

Social and affordable housing funds account for 51% of the overall 2023 market.

How has the market changed?

Outstanding investment in social and affordable housing has remained relatively stable since 2022 at £5.1bn.

What does the data show?

Although outstanding investment is stable compared to 2022, the value of the funds we have included in both years have increased by 11% and deal flow has increased by 3%. This shows an overall increase in the value of investments and new deployment year on year has been relatively stable. The reason for stable growth overall is due to a consolidation of market participants that meet our impact intent criteria.

We have also included one new fund this year, Henley Secure Income Property Fund, which meets our impact intent definition as set out above: (link to definition set out here in methodology and definitions section). Figures indicate that during the macroeconomic turbulence of recent years, social and affordable housing proved more resilient than other real estate sectors.

Investments from across our own portfolio

Case study

Notting Hill Genesis

Notting Hill Genesis, as one of the largest housing associations in the country, is dedicated to addressing homelessness and the wider housing crisis by providing quality affordable housing.

Social lending

Social lending accounts for 41% of the overall 2023 market, up from 37% in 2022.

How has the market changed?

Outstanding investment in social lending has increased by 16% since 2022 to ~£4.1 billion in 2023 (£3.5 bn in 2022).

What does the data show?

Outstanding investment across all 3 areas of social lending have increased since 2022:

  • Bank Lending refers to loans made to charities and social enterprises by dedicated social banks – this area has shown an increase of 10% in size from £2.5bn to £2.7bn in 2023.
  • Non-bank lending refers to debt finance taken on by charities and social enterprises to provide working capital and growth finance. This asset class also includes investments made into community shares and crowdfunding platforms – this area has shown an increase 9% from £627m to £680m in 2023.
  • Charity Bonds refer to tradable loans that offer large scale unsecured finance with fewer restrictions than bank finance – this area has shown an increase of 58% from £454m to £719m in 2023  

Increases in the market size across social lending are driven by small increases in underlying value of investments from 2022, new inclusions of charitable bonds into housing associations, notably £200m deal flow in 2023 relating to the Scottish Charitable Bond Programme, and 2 new contributors (Ceniarth and People's Postcode Lottery).

An increase in outstanding value across each of the three areas of social lending, especially in non-bank lending, highlights the ongoing resilience from charities and social enterprises. However, the market continues to demonstrate an increased need for blended capital to secure investment across the UK to both broaden geographic reach and attract more private capital alongside public and catalytic investment.

Find out more on our approach to Blended Finance.

Investments from our own portfolio

  • CORE – Community owned renewable energy puts renewable energy into community hands to help make places better for people, whilst accelerating the transition to net zero.
  • Energy Resilience Fund is aimed at supporting community and social enterprises to reduce energy usage, stabilise energy costs and contribute to long-term Net Zero goals.
  • Social Impact Debt Fund IV provides unitranche funding of up to £4m to impactful enterprises with balance sheets to support secured debt.

Case study

The Children’s Trust

The Children’s Trust provides intensive rehabilitation for children with acquired brain injuries and services for children with neurosdisability.

Impact venture

Impact venture currently accounts for 8% of the overall 2023 market.

How has the market changed?

Outstanding investment in impact venture has increased by 22% since 2022 at £824m (£673m in 2022).

What does the data show?

This year we have included 5 new managers and funds from our Impact VC community which meet our impact intent definition, which has driven much of the growth. Removing the 5 additional new funds, the market growth would be up 3% from 2022.

The market growth from existing funds and contributors reflects a challenging fundraising year however our estimate reflects an increase in venture funds tilting towards impact with the addition of the new contributors. This aligns with broader market commentary around a global slowdown in VC funding as referenced by Dealroom alongside evidence of increased interest in impact with the launch of Impact VC in 2023, a global community of VCs interested in impact, that has grown to >600 firms with >£50bn AUM collectively.

We believe our figure is an estimate of the lower bound of the market, given the challenges in visibility into venture investments that are intentional about the impact they seek and the pace of the market.

Investments from our own portfolio

  • Eka Ventures Fund invests in consumer technology companies building a healthier, more sustainable and inclusive economy.
  • Fair by Design Fund invests debt and equity in early-stage businesses aiming to eliminate the poverty premium in the UK.

Case study

Flok Health

Flok Health is the UK’s first AI-operated physiotherapy clinic, providing NHS patients with immediate access to personalised care, at population scale.

Social outcomes contracts

Currently accounts for less than 1% of the overall 2023 market.

How has the market changed?

Outstanding investment in SOCs has reduced to £17m in 2023 (£28m in 2022).

What does the data show?

This reduction is due to contracts ending in late 2022 and 2023.

BSC, alongside others, continue to call upon the Government to reallocate budgets to these multi-year outcomes funds. Learnings over the last 13 years have demonstrated the value of social outcomes contracts, enabling Government to spend smarter whilst tackling complex social issues.

Investments from our own portfolio

Case study

Thrive Social Prescribing

Thrive Social Prescribing, or Thrive Northeast Lincolnshire (Thrive.NEL), supports people aged 18-75 with at least one of eleven long-term health conditions (including but not limited to asthma, chronic heart disease, diabetes and hypertension) to create sustainable lifestyle changes and improved self-care habits.