The UK’s social investment market is worth £3.5bn, a 30 per cent increase on the previous year, according to Big Society Capital.
BSC said the figure had grown at about 30 per cent in every year since 2015, which showed that more capital was available for organisations tackling urgent social issues.
There were 1,023 new social impact investment transactions that took place in 2018, compared with 755 in 2017, BSC said.
There have been more than 4,000 such transactions since 2013, the figures show.
Jeremy Rogers, chief investment officer at BSC, said the growth of social investment was being driven by increasing awareness of and confidence in taking on investment by social enterprises and charities.
He said there was an increase in interest in investing with purpose, meaning new and innovative products were being created by fund managers.
"This increase in products and capital has created more options for both investees and investors, helping capital to flow where it is most needed," said Rogers.
"We know that many of the issues social enterprises and charities are aiming to tackle, such as homelessness and financial exclusion, require significantly greater amounts of capital than is currently available to them.
"It is therefore fantastic to see this continued growth in the social investment market, helping to fund vital projects across the UK."
Sarah Gordon, chief executive of the Impact Investing Institute, said: "We need to do more to make it easier for social enterprises and charities to access more of the capital that is so badly needed to address the social challenges we as a country face.
"Lowering some of the barriers that stop more capital flowing into impact investment will be one of the ways we hope to help further growth in the market."