The UK’s social investment market is now worth over £3.5 billion [1] according to the latest estimate by Big Society Capital, the UK’s leading social impact investor [2]. Since the end of 2015, there has been phenomenal market growth of at least 30% each year. This headline figure reflects important trends within both the financial and social sectors, including larger amounts of capital being made available to organisations tackling urgent social issues.
Big Society Capital’s research shows this capital is already being put to good use, as the increase in the number of social impact investment transactions was greater between 2017 and 2018 (1023) than in previous years (755 between 2016 and 2017). These transactions are largely helping organisations requiring smaller loans or those unable to access mainstream finance, such as loans from high street banks.
Jeremy Rogers, Chief Investment Officer, Big Society Capital, said:
“The market’s impressive growth is being driven in part by increasing awareness of and confidence in taking on investment by social enterprises and charities. We have also seen growing interest in investing with purpose, which has prompted fund managers to create new and innovative products. This increase in products and capital has created more options for both investees and investors – helping capital to flow where it is most needed.
“We know that many of the issues social enterprises and charities are aiming to tackle, such as homelessness and financial exclusion, require significantly greater amounts of capital than is currently available to them. At Big Society Capital we work to connect this demand with interested investors. It is therefore fantastic to see this continued growth in the social investment market, helping to fund vital projects across the UK.”
Sarah Gordon, CEO of the Impact Investing Institute, commented:
“It is good news that the UK's social investment market is continuing to grow. But we need to do more to make it easier for social enterprises and charities to access more of the capital that is so badly needed to address the social challenges we as a country face. Lowering some of the barriers that stop more capital flowing into impact investment will be one of the ways we hope to help further growth in the market.”
Big Society Capital is working to grow the amount of capital invested in the social impact investment market further and has already played a key role in its development, through various initiatives including:
- Helping with the creation of Access – The Foundation for Social Investment (Access), and the Access Growth Fund, a blended finance initiative aiming to increase the availability of smaller (less than £150,000) unsecured loans to social enterprises and charities - funded by the National Lottery Community Fund and Big Society Capital
- Developing the Charity Bond Support Fund, to support the development of the charity bond market by providing issuers and investors with the confidence they both need to see sustainable growth. The fund has helped the charity bond market grow from £30 million in 2014 to over £300 million in 2019
- Working as a cornerstone investor in the social property market, investing alongside others in specialist social investors such as Resonance, which has grown through partnerships with key investors from having no funds under management to creating and managing 7 funds worth over £210 million3.
- Working with Access and the Department for Digital, Culture, Media & Sport to establish Good Finance, a free website helping organisations navigate the social investment market, which now has over 100,000 unique users
[1] This is the amount of outstanding investment, also known as balance sheet amount. It is the drawn down amount of finance less any repayments or write-offs that is currently being used by UK social enterprises and charities
[2] Social investing is a subset of impact investment, with some distinguishing factors including: the intention to deliver deep impact, being impact first, and with a long-term commitment to delivering impact.
[3] Big Society Capital website, Guest blog: "Partnership has been essential to our growth"
There have been changes in definition since our 2016 report on market sizing which has led to more investments being classified as social impact investment including some of Triodos and social property investments. We have also adjusted previous years market size reports to take account of these changes so the report is consistent
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NOTES TO EDITORS
More details can be found in our blog available here.
ABOUT BIG SOCIETY CAPITAL
Big Society Capital improves the lives of people in the UK by connecting social investment to social enterprises and charities.
We know that investment can help social enterprises and charities achieve more. We believe the greatest chance to improve lives comes when investors and enterprises are both motivated by social mission.
We engage with investors, fund managers, social enterprises and charities to make it easier to use social investment. With our co-investors, we have made over £1.7bn of new capital available to organisations with a social mission, through investments into fund managers and social banks. We have a special focus on: providing homes for people in need; supporting communities to improve lives; and early action to prevent problems.
Press Contact
Kathryn Mortimer, Press Officer, Big Society Capital
T: 020 7186 2537, E: kmortimer@bigsocietycapital.com