The marketing of social investment should focus more on attracting individual "ordinary citizens" rather than focusing only on institutional investors, according to a report from the social lender Triodos Bank for the G8’s Social Impact Investment Taskforce.
The report, Impact Investing for Everyone: a blueprint for retail impact investing, says that the major funders of impact investment "have, to date, been foundations, philanthropic institutions and governments". Attempts to expand the investor community have generally focused on institutions such as pension funds, insurance companies, foundations and other traditional sources of philanthropy.
"The one group often overlooked is ordinary people – retail investors," the report says. Despite this, retail investors "already are a significant force in the development of impact investment", it adds.
The report points to the success of the retail charity bond launched by the housing arm of the learning disability charity Mencap as an example of this. It also says individual investors’ participation could be increased.
According to the report, the wider public wants and should have better access to social investment opportunities. It notes that a recent poll carried out for Triodos found that 20 per cent of individual investors said they were likely or very likely to consider social investments. The figure was 51 per cent among those aged 18 to 35.
"Regulation, tax incentives and opacity in the financial industry have, to date, combined to prevent this happening," the report says.
Recommendations for increasing the number of retail investors include the creation of investment funds specifically for a retail audience, the expansion of employee savings and pension plans with funds dedicated to impact investment, and the creation of new "mainstream tax incentives for retail impact investments", such as the UK’s social investment tax relief. More retail investors would create a more diverse, resilient and engaged market, the report says.
James Vaccaro, head of corporate strategy at Triodos and the author of the report, said: "The desire for social investment is clearly there, but we are at a crossroads in terms of whether this becomes a mass movement for everyone or is a new game that only a select few can get to play.
"We have found time and time again that it is individuals who get the social impact of our clients most readily. If we can develop social investment products that are suitable for them, with tangible credible social impact, they will invest."
The Social Impact Investment Taskforce was set up under the UK’s presidency of the G8 group of the globe’s richest nations in 2013. Chaired by Sir Ronald Cohen, a co-founder and the first chair of the social investment wholesaler Big Society Capital, the taskforce produced a report in September that recommended reform of the regulatory framework for charities to allow them to invest more freely in schemes that achieve social good, among other measures.