Is place-based investing the place to be?

In recent years, interest has been rising in place-based impact investment. But what do we mean by place-based investing – and why is it important?

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The latest average life expectancy for women from the UK’s most affluent places is 87. For women in the poorest areas, this drops by a staggering eight years, to only 79 [1]. Despite the UK’s position as one of the world’s original ‘developed’ countries, and copious technological advancements, this gap has continued to widen with alarming regularity since 2001.

Our day-to-day jobs at Big Society Capital involve trying to unite capital with organisations creating positive social impact. This shocking life expectancy gap is one of several symptoms of entrenched inequality that exists both between and within places across the UK, and where we (and our capital) have a role to play.

We are deeply motivated by the vision of a UK with more equal and inclusive places, with low poverty and strong social economies. We don’t believe people’s life chances should ever depend on their postcode.


What is place-based investing?

In an ever-evolving field like social impact investment the jargon and buzz words can seem never ending! One term that’s becoming increasingly prevalent as we support communities and collaborate with various organisations: from foundations and investors to governments and think tanks… is ‘place-based investing’. It seems, if you’re not working in ‘place’, you’re nowhere!

But what do we mean – what is ‘place-based investing’?

In a general sense, place-based impact investment simply refers to impact investments made into a variety of social enterprises and charities tackling different social issues within a specific geographic location.

Whilst this broad definition is not intended to be definitive, there are a few key points that are at the heart of what it means to us. Place-based social investing is all about connecting our investment into the context of each place. Front and centre are:

  • The strengths of each place, its networks, its organisations, and its communities
  • The needs of the place and especially of the people who live there
  • An alignment of resources from partners to do more together than we can apart
  • An aim to increase appropriate capital for the business models which create impact alongside and for their communities; and
  • The creation of long-term, dedicated capacity (that builds local ownership to take their future success into their own hands)

While only one strand of our activity, and by no means the only route to supporting thriving and inclusive communities, it’s a leading tactic we’ve been using in our investments.

Example of place-based investing

In practice there are four tangible steps we go through when we are working with partners to identify what a place-based investment might look like, and a lot of questions to answer.

  1. Vision

    Where are we going? What are we trying to do? Are there core challenges to align around? This vision must have credibility with the communities it is designed with and for, be data-informed and motivate people to action or they won’t align around it.

  2. Organisations

    Are there enough organisations and projects that will take on investment and use it to make a difference in their communities? What stage are they up to? What impact are they seeking? What does the data tell you? What assets do they have? What development needs exist? Which ones are the community most proud of?

  3. Capital and resources

    Next, we focus on the fuel to help these organisations go forward – what is the right mix of capital and resources that they can connect to achieve their vision? Do they fit the organisation’s needs? What already exists in the current landscape and what are the key gaps to fill? Do they align risk and incentives properly to create the intended impact?

  4. Stakeholders

    Finally, are all the right stakeholders around the table to make it all happen? They could be key partners, significant asset holders, local anchor organisations, local Government , community representatives, fund managers, investors at scale or those with long time horizons… the combination may well differ in each context. You don’t need all of them on day one, but you do need at least enough of them on the pitch to kick off.

A great example is our recent work in Bristol where we created a new £10 million fund in collaboration with Bristol Council to tackle inequality. The investment is aligned with Bristol’s One City Plan. The Plan sets an ambitious agenda aiming to take the Bristol City Region from a divided city with deep inequality, to a fairer, more equal and sustainable place over the next 30 years.


Get involved in place-based investing

If you have ideas, stories to share, or are keen to work with us, please do get in touch. We are particularly keen to hear from people and organisations who are part of local leadership groups in places that might be ready, willing, and able to try something along the lines of the previous examples. We’d also love to hear from local investors or fund managers who understand their local or regional landscape and are seeing unmet demand.

If you want to hear more, we will also be hosting a session at the National Social Value Conference in January 2020 on how social investment in the context of places can help create more inclusive economies. Sign up - we’d love to see you there!

We know this is complex work, but we also believe it is critical, and if we want to connect our social investment transactions to greater transformation in the lives of the communities around the UK we need to give it everything we’ve got.