UK Impact Investments Surge

A new report reveals that hundreds of charities and social enterprises are using social investment to address some of the country’s toughest issues – homelessness, youth unemployment and the social care crisis.

An independent financial institution set up to help grow social investment in the UK, Big Society Capital has published its 2015 Annual Review, outlining the growth and impact of social investment across the UK.

It found that more than 270 charities and social enterprises are using £195 million (A$385 million) of social investment to support their work.This includes £68 million (A$134 million) from Big Society Capital, alongside £127 million (A$251 million) from co-investors.

According to the report the amount of money available to charities and social enterprises rose to £587 million (A$1.1 billion), across 48 different investments. Nearly a fifth (19 per cent) of Big Society Capital’s co-investors are UK charities and foundations.

In March 2016 Big Society Capital estimated that social investment across the UK was worth more than £1.5 billion (A$2.9 billion), with at least 3,000 different charities and social enterprises using it to improve society.

The new report highlighted the impact of investment in key areas such as community, employment, training and education, and housing, with investments reaching over 270 charities and social enterprises. Big Society Capital said that the early findings from its stakeholder survey showed that nearly 70 per cent of people believed it was having a positive impact.

“Our job is to make sure that charities and social enterprises can borrow the money they need to do more of their wonderful work. It’s great that we are now reaching nearly 300 organisations, and all credit to the teams here, in the social investors, and in the charities and social enterprises,” Big Society Capital chief executive Cliff Prior said.

“But we know that there are many more social organisations that could benefit. Working from the ground up with the social issues and the people trying to solve them, will mean we can see where and how social investment can play its part. We want to reach a point where social investment can be a valuable and readily accessible tool in the toolbox of every charity or social enterprise.”

Big Society Capital chair Harvey McGrath said social investment was not just about numbers.

“It is about people – people who are using social investment as a tool to help their organisations do more; people investing for social impact; and the people whose lives are made better by the work of charities and social enterprises. It’s great to hear these stories and see how social investment is changing the lives of people and communities,” McGrath said.

The director of engagement and communications at Impact Investing Australia, Carly Hammond, said it was “fantastic to see such growth in social investment in the UK, with large amounts of capital being leveraged and directed to social enterprises and Not for Profits working on persistent social issues”.

“The challenges we face as a society are simply too large to be addressed by governments and philanthropy alone,” Hammond said.  

“In Australia, there’s strong momentum around impact investing and investor appetite is growing. However to achieve scale here, we need an organisation like the UK’s Big Society Capital, that acts as both an investor and an impact investment market champion.”  

She said Impact Capital Australia was being designed here as just that.    

“ICA will help drive the impact investing market predominantly through wholesale investment. It will originate socially impactful, innovative and scalable solutions to social issues, along with ways of funding and financing them.

“We are engaging governments to help bring this institution – Impact Capital Australia – to market, in partnership with the private and community sectors. Similar to what we are seeing with Big Society Capital in the UK, ICA will create a important multiplier effect for government funding,with its contribution incentivising and accelerating commitments from institutional and private investors.  

“Ultimately, ICA aims to change the way we address social issues in Australia.”