UK social impact investment reached £9.4bn in 2022
Melanie May | 12 September 2023 | News
Investment into tackling social issues in the UK grew to £9.4 billion in 2022, according to Big Society Capital figures, despite the economic woes.
This is up from £7.9bn in 2021, Big Society Capital’s annual survey shows. It attributes the increasing investor appetite for social investment to three key drivers: social investment offering a diverse portfolio of investments that provide resilient returns; the sectors where it invests having strong long-term demand characteristics; and many investment areas like social housing being backed by Government statutory funding, which makes them resilient to macroeconomic forces.
Advertisement
Stephen Muers Big Society Capital CEO said:
“The continued growth in social investment in this challenging environment is welcome and demonstrates an increasing investor appetite for creating positive change to people’s lives. But evidence shows that significantly larger amounts of private capital are badly needed to help tackle social problems.
“The time is now for the Government to build on this British success story and help unlock social impact investment at much greater scale – without spending a penny more.”
Big Society Capital sets out three key ways the Government can unlock this increase in investment without needing to spend more:
- By allocating a significant portion of its new tranche of dormant assets to social investment to maximise its impact
- By innovating its approach to public service funding for complex social issues to harness more finance through outcomes partnerships
- By using existing housing budget to catalyse private investment into social homes
Its figures show that social impact investment has increased more than ten-fold since 2011 (when it was £830mn) to 2022’s £9.4bn. Over this time more than 5,000 organisations have used the capital from social investment to deliver key services and support to communities throughout the country.
Where the investment goes
In 2022, £1.8 billion was committed across 1,310 investments into projects that deliver measurable social impact such as affordable homes, community food banks and tech startups tackling mental health.
82% of organisations receiving social lending are based outside London. With 62% of social lending targeted at the UK’s most deprived communities according to the IMD Index.
18% of the organisations surveyed by Big Society Capital were based in the north west, including Open Kitchen, a sustainable catering business in Manchester which has taken on social investment from Access and Key Fund to provide local people with meals and grocery parcels.
Corin Bell, Executive Director at Open Kitchen, said:
“There’s not a mainstream bank in this country that would have supported us as a small independent food and drink venture during the tricky economic climate of 2021 – so we simply wouldn’t be here if it wasn’t for Key Fund and its investors such as Big Society Capital.”
More on the funding
Big Society Capital was capitalised with funds from English dormant bank accounts and investment from Barclays, HSBC, Lloyds and NatWest Group. The key areas for investment are lending to social enterprises and charities; social and affordable housing; social outcomes partnerships and impact venture.
For each sector:
- Investments into social and affordable homes increased by 35% in 2022, to £5.1 billion.
- Social lending including bank, non-bank and charity bonds was up 6% to £3.5 billion, There was a sharp increase in deals in 2020-2021 as a result of a high number of emergency COVID deals.
- The impact venture market down 10% to £673 million, a decrease big Society Capital says reflects wider trends in the venture investment market.
- Social outcomes remain a “small yet significant part of the market” at £28 million. The UK has launched 90 public service innovation projects to-date tackling complex social issues including labour market inactivity, mental health among young people, criminal justice and NHS backlogs.
Big Society Capital has been surveying the size of the market since 2016. It includes data from investments in Big Society Capital’s own portfolio, as well as the wider UK social impact investment market. Inclusion is based on investments made with impact intent.
Related posts
Barriers to high-net-worth impact investing addressed in new report
Lack of philanthropic culture in nonprofits hindering income growth, finds study
UK sees six-fold increase in social impact investment market in eight years
More support needed to help volunteers move between organisations, BHF survey says
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.