The social finance market was worth £202m in the year to March 2012 – a rise of 22 per cent on the previous year – according to a report published today.
Growing the Social Investment Market says that 765 deals were carried out in the year and that 29 social investment finance intermediaries, or SIFIs, actively invested in 2011/12.
Of these, four large social banks accounted for 82 per cent of the market by value, although only 30 per cent of it by volume. Nine SIFIs that made investments of more than £1m a time accounted for another 15 per cent of the market value and 56 per cent of investments.
The report says that 89 per cent of respondents expect to increase their investments in social ventures over the next two to three years. It says that 90 per cent of lending was secured against borrowers’ assets, up from 84 per cent the previous year. Unsecured lending was £20m over the year, compared with £26m the year before.
The report says this showed there was still not "sufficient identified high-risk unsecured social investment" for third sector organisations.
It adds: "This report clearly demonstrates the value of the social investment market, not just in social terms but also the economic benefits, by undertaking a robust economic impact analysis for the first time."
The report was commissioned by the Big Lottery Fund, Big Society Capital, the City of London Corporation and the government. It was written by the consultancy ICF GHK in association with the research firm BMG Research.
Nick Hurd, the Minister for Civil Society, said the report showed that "social investment is an idea whose time has come".
"This is a quiet revolution that Britain is leading to transform the funding environment for charities and social enterprises," he said. "It is early days, but these figures show an uplift in both willing investors and new projects ready to take on funding.
"By measuring the size of the market, and the effect it is having on people’s lives, we can build evidence to attract even more funding and social entrepreneurs."