Social impact investment market grows to £10bn, with loans to charities up 16%
Melanie May | 7 October 2024 | News
The UK’s social impact investment market grew 7% to reach £10 billion at the end of 2023, according to Better Society Capital’s annual assessment.
This is up from £9.4 billion in 2022 and, Better Society Capital says, shows stable investor support for initiatives focused on tackling social issues such as child poverty, homelessness and long-term health conditions, despite economic challenges.
Loans to charities and social enterprises saw 16% growth, reaching £4.1 billion in 2023. This was driven by charity bonds, increased bank lending and debt funds.
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The performance of the social housing market remained consistent at £5.1 billion in both 2022 and 2023.
Pension funds & endowments most active investors to date
Better Society Capital has also estimated the composition of the 2023 market, based on over 1,000 investors, to show the different types active in the market and the areas they are investing in. This identifies 14 distinct investor groups, with the top groups including pension funds, endowments and charities, and asset and wealth managers. Pension funds provide 21% of investment, with the highest concentration in social and affordable housing. Endowments and charities are the second largest investor group, committing 14% of the investment.
Active partnership needed to unlock more investment
Ahead of the Budget at the end of the month, Better Society Capital says the government should consider the role of social impact investment and how it can support left-behind places. It is calling for active partnership between investors, businesses and the government to unlock more social impact investment in communities across UK.
Stephen Muers, CEO of Better Society Capital said:
“It is a source of encouragement that the UK social impact investment market grew once again last year. However, we must not lose sight of the significant challenges ahead, whether that’s in housing, social inequality and the disparity in health and wellbeing across the UK.
“As we look to the future, it is crucial for investors, businesses, and the government to work closely together to channel investment towards organisations that need it. With the Labour government’s focus on growth we have a unique opportunity to shape policies that encourage more capital into impactful projects that benefit society, ease the burden on the treasury and support the economy.”
Stephanie Peacock MP, Parliamentary Under Secretary of State for the Department for Culture, Media and Sport, commented:
“Labour has a proud history in this area – with Gordon Brown setting up the idea of impact investment from social bonds. As we set our priorities as a Mission Driven Government, we look forward to continuing this legacy by championing the growing impact investment sector, who harness the innovation and entrepreneurship in our country and direct it towards a common good. From assets of community value to cooperatives – we want to see more projects being funded where they are needed most.”
Better Society Capital’s investments represent 5% of the market – with a typical investment bringing in £3 of co-investment for every £1 invested originally.
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.