UK social impact investment market swells to a record GBP6.4bn in year of the pandemic
Social impact investing in the UK has increased by almost eight-fold over nine years from GBP833 million in 2011 to GBP6.4 billion in 2020, according to new figures released by Big Society Capital, a UK social impact investor.
The data, from Big Society Capital’s Annual Market Sizing Report, shows there has been consistent growth year-on-year with a particular acceleration between 2019 - 2020, the year of the pandemic, which saw a 26 per cent increase in the value of social impact investments in the UK (26 per cent 2019-2020 vs 21 per cent increase 2018-2019).
Social property funds continue to account for the largest portion (45 per cent) of the social impact investment market and has seen eight-fold growth since 2016. Social lending accounts for 43 per cent of the market, seeing three-fold growth since 2011.
Some of this growth in the social lending sector can be attributed to funds launched in response to the Coronavirus pandemic, such as the Resilience and Recovery Loan Fund, set up by Social Investment Business with funding from Big Society Capital.
Existing funds also contributed to the growth in social lending, supporting social enterprises and charities through the crisis by providing additional flexibility and liquidity. These included the Community Investment Enterprise Facility and the Growth Fund, created as a partnership between Access, the National Lottery Community Fund and Big Society Capital.
This further demonstrates that social impact investment is playing a key role in providing financial support to social enterprises and charities so they can continue to help communities which have struggled even more following the impact of Covid-19.
Stephen Muers, CEO of Big Society Capital, says: “Social enterprises and charities have been a fundamental lifeline for many of the millions who were furloughed, made redundant, or isolated from their regular social networks and support. They became frontline services for the nation and have played an important role in the recovery.
“Despite this, the mainstream funding challenges persist for many of these organisations, so it comes as highly welcome news to see the burgeoning growth of social impact investment from the private sector, alongside increasing investment from both local and national government.
“But this is only a fraction of what we believe is possible over the next few years. Momentum is building and social impact investment has a huge role to play. We aim to at least double the capital going into UK social investment, to between GBP10 billion and GBP15 billion by 2025.
“More and more investors are realising that it is possible to deliver both a social and financial return and so we are confident the market is on track to meet this ambitious target.”
Sarah Gordon, CEO of the Impact Investing Institute, says: “The social investment market sizing which BSC conducts sets an important baseline which demonstrates not just how dynamic this market is, but how relevant it is for policy-makers intent on increasing opportunities and addressing regional inequalities across the UK. We’re excited to be integrating this work into our own impact investment market sizing exercise, which will take a broader look at institutional capital dedicated to impact.”