Big Society Capital has produced its first comprehensive estimate of the size and composition of social investment in the UK.
Its new report finds that:
- Social investment in the UK is worth at least £1.5 billion. This is the value of social investments outstanding at the end of 2015.
- There are nearly 3,500 different social investments outstanding at the end of 2015. Big Society Capital estimates that at least 3,000 different charities and social enterprises currently benefit from social investment.
- Over two-thirds (70%) of social investment is channelled to charities, and social enterprises with some kind of asset lock.The rest of social investment (30%) is focused on social enterprises and profit-with-purpose companies without an asset lock.
- Higher-risk products are now a significant part of overall social investment. Social bank loans to asset-locked organisations are still the single most prevalent product, but products such as social property funds (9%), unsecured loans (10%), community shares (6%), charity bonds (6%), and equity-like products (2%) have emerged strongly in recent years.
- Social investment deal-flow in the 2015 calendar year saw around £427m of deals offered to about 700 charities and social enterprises. It appears that deal-flow has more than doubled in value since 2011, representing roughly a 20% annual growth rate.A lot of the growth in deal-flow has come via higher risk products.
Matt Robinson, the outgoing Head of Strategy at Big Society Capital and the report’s author said:
“We believe that social investment in the UK is now helping thousands of charities and social enterprises. We are seeing a diverse range of different investment products, with quite significant growth in higher-risk forms of capital such as unsecured loans, community shares and charity bonds. This research also shows that social investment deal-flow is growing, and is more than double the level of five years ago.”
Cliff Prior, Big Society Capital’s new Chief Executive Officer said:
“Big Society Capital’s job is to make sure that charities and social enterprises can get the investment they need to do more of their fantastic work. It’s vital to have a good understanding of where social investment is today, as the starting point to chart a course for the future. This report helps with that, and builds on Big Society Capital’s commitment to improved data and transparency around social investment.”
NOTES TO EDITORS
In its new report Big Society Capital has estimated the size and shape of social investment to take stock of progress in its development, and to gauge how relevant it is becoming as a tool for charities and social enterprises. This work has been facilitated by recent advances in data and transparency.
The report defines social investment as ‘the use of repayable finance to achieve a social as well as a financial return’ and adds a further definition that: ‘social investment requires both the investor and the user/investee to explicitly intend to create a positive social impact’.
It also estimates the size of wider forms of impact investment, in which either the investor or the user/investee (but not both) is socially motivated. Big Society Capital estimates that investor-led impact investment in the UK is worth at least £3.2bn and investee-led impact investment, which includes all housing association debt, at least £68bn.