At its core, catalytic capital aims to unlock impact and draw in additional investment that would not otherwise be possible, resulting in the strengthening of communities and seeding and growing social innovation using multiple tools and approaches. Its usages in the UK have been multifaceted and have included the use of subsidies, guarantees, blended finance structures, and concessionary risk-tolerant investment. The flexibility of this capital and the differing interactions that stakeholders have with it is a key challenge in talking about catalytic capital in the context of the UK. This report seeks to lay the beginning of more nuanced conversation about the usage and best role that catalytic capital can have within the UK social investment market.

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Given the important nature of catalytic capital, Big Society Capital, and Access - the Foundation for Social Investment have come together to commission this piece of research alongside the Association of Charitable Foundations. This research report is the first in-depth study on the usage of catalytic capital in the UK and aims to provide insight into the opportunities and challenges that exist when it comes to improving access and growing the supply of catalytic capital here in the UK. This report has engaged over 70 different stakeholders from a wide variety of backgrounds to develop a series of recommendations on how we can improve the provision and understanding of catalytic capital here in the UK as well as begin to come to a position of developing a UK approach towards catalytic capital. It has also engaged with and investigated international examples and initiatives, as a way of bringing in vital lessons from around the world on how catalytic capital has been used to further the opportunities for learning here in the UK.

This report has set out to conduct an in-depth literature review of both UK and international examples of catalytic capital and to review catalytic capital funds and notable investments in the UK and internationally to better understand catalytic capital in a UK context. Following this, it then looks at the best uses of catalytic capital and where barriers exist and recommendations on how we can increase the provision of catalytic capital. Due to the constraints within this research, the focus of the report has been on looking at the delivery of social impact and not fixating on legal structures, as well as focusing on the role of investments and investment structures. This, alongside the methodology used has all been outlined further within the report.

We hope that this report begins several conversations on catalytic capital here in the UK, as well as serves as an impetus for cross-sector collaboration on how we can grow the provision of this vital investment here in the UK. As well as developing a common understanding of catalytic capital, this report aims to sets in motion a much-needed conversation around how we can grow its provision, as well as provide an opportunity to engage with stakeholders, including both trusts and foundations and Government, on how we can build upon the recommendations shared. This is the right time to be having this discussion on catalytic capital, given all the various streams of work taking place on this topic across the world and the further need for catalytic capital to play a vital role during a period of economic uncertainty. We hope that this report adds to the important discussions taking place and is the first step towards much-needed tangible solutions to grow the provision of catalytic capital here in the UK.

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