Social investment sector worth more than £1.5bn, says Big Society Capital report

The social investment wholesaler's first comprehensive estimate of the size of the sector says it benefits at least 3,000 different charities and social enterprises

The UK social investment sector is worth more than £1.5bn and benefits at least 3,000 different charities and social enterprises, according to a report from the social investment wholesaler Big Society Capital.

In a report that makes its first comprehensive estimate of the size and composition of social investment in the UK, BSC says it found approximately 3,500 different social investments outstanding at the end of 2015, with higher-risk products growing in popularity.

The report says that the social investment deal-flow, or the rate at which investment offers are received, included about £427m offered to 700 charities and social enterprises in 2015.

This is more than double the 2011 total and represents an annual growth rate of 20 per cent, the report says.

It says higher-risk products "are now a significant part of overall social investment", with unsecured or equity-like products accounting for at least £167m of investments.

Social property funds, unsecured loans, community shares, charity bonds and equity-like products each represent between 2 per cent and 10 per cent of overall social investment, according to the report.

It says about 70 per cent of social investment contains some form of asset lock, a legal clause that prevent a company’s assets being used for private gain rather than the purposes of the organisation. The remaining 30 per cent focuses on social enterprises and profit-with-purpose companies without using an asset lock.

Social impact bonds and social investment tax relief were worth £14m and £1m respectively in 2015, the report says.

But it adds that SITR will grow significantly in the future once the cap on the amount an organisation can receive is raised from £290,000 over three years to £5m a year and £15m in total.

The report estimates the UK investor-led impact investment market is worth £3.2bn, and the investee-led impact investment market, including housing association debt, is worth £68bn.

Matt Robinson, 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."

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