Nesta fund has made no investments in charities since its launch

A report by the innovation charity says that even forward-thinking charities are experiencing challenges that prevent them from using technology to its full potential

Nesta Impact Investments
Nesta Impact Investments

The innovation charity Nesta has not made a single investment in a charity from a social investment fund launched in 2012, and says it is surprised at the sector’s lack of interest in innovation in this area.

The £17.6m Nesta Impact Investments fund was launched in November 2012 to fund what Nesta describes in a new report as "life-changing innovations that help tackle the major challenges faced by older people, children and communities in the UK".

The report on the fund’s progress says that it had been expected to invest in a range of organisations including charities, community interest companies, social enterprises and private companies. The report says: "The first 18 months have seen relatively little interest from charities. Of more than 400 expressions of interest in our target areas, only 15 per cent have come from charities.

"Many charities are doing excellent work in the sectors we focus on, so we were surprised by the lack of interest in impact investment."

Of the seven investments made by NII so far, all are in private companies or social enterprises, the report says. "So far, we have invested only in companies and social enterprises with a commitment to creating and demonstrating a social impact," it says.

These include a social enterprise that runs group exercise classes for older people, and a developer of learning support materials and digital assessment products for schools.

Nesta’s report contains recommendations on how to enable charities to better embrace innovation, having taken evidence from a round-table event with five charities.

"With society becoming increasingly digitalised, charities need to keep up in order to stay relevant to their beneficiaries and efficient in their delivery," it says. "Yet our round table revealed that even forward-thinking charities are experiencing challenges that prevent them and others from using technology to its full potential."

The report makes four recommendations. The two aimed at the charity sector are that it should build networks of charities with experience of technology-based innovation in order to provide examples of best practice and peer learning for other charities, and that it should create resources for trustees on topics such as technology and impact investment.

It says that funders "should create new funding sources for charities that are innovating using technology" and that grant funders and impact investors "should build links so that charities do not face funding gaps".

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