Social impact investment in the UK has grown nearly tenfold over ten years, from £830 million in 2011 to £7.9 billion in 2021, according to figures from Big Society Capital.
Data from its annual Market Sizing exercise – which estimates the value of investments made by UK social impact investment funds since 2011 – shows that the market has seen a steady growth trajectory year-on-year, with a 22% increase between 2020-2021.
Big Society Capital’s analysis of 5,900 of social impact investment commitments made in the past decade shows that 82% were made to charities and social enterprises based outside of London, and 60% to those in the UK’s most deprived communities.
In addition:Around £1.6 billion of investment was committed across approximately 1,300 investments in 2021.Social and affordable housing funds continue to account for the largest segment of the total market at £3.8 billion. Social lending is the second largest segment at £3.3 billion.
Enterprises that have taken on social impact investment to deal with cost-of-living issues include AgilityEco, which helps low-income households manage their energy bills through providing practical help with energy efficiency and household finances. And financial wellbeing app Wagestream, which is subsidised by employers and enables workers to manage their budgeting, choose their own pay cycle, and access deals on financial products.
Local renewable projects have also received substantial social impact investment. By 2020 alone Big Society Capital had invested in projects accounting for more than half of UK community energy generation using solar or wind. These include Community Owned Renewable Energy LLP (CORE) – a £40 million investment programme which helps purchase solar farms, with the long-term aim of turning them into community-owned assets.
Julia Lenon, Portfolio and Data Manager, Big Society Capital commented:
“Our further enterprise-level analysis of market commitments revealed that social impact investment is reaching all UK regions and positively weighted in areas of deprivation – for example, 33% of commitments were made within “levelling up priority one areas”.
“It also showed that people living in poverty and/or financial exclusion are the largest users of social impact investment – at 12% of commitments made. The second and third largest user groups are vulnerable young people (10%) and vulnerable older people (8%).
“We know there is more that can be done to address the regional inequalities that exist, this data suggests that social impact investment has a key role to play in reducing them.”
Stephen Muers, Chief Executive at Big Society Capital, said:
“These figures demonstrate both an increasing investor appetite for creating positive change to people’s lives, and the ability of this market to stay resilient during the extremely challenging circumstances resulting from the pandemic.
“As the economic crisis worsens, the need for social impact investment to support social enterprises, charities and community enterprises will be ever more critical. We look forward to continuing our work with our partners across social investment, enterprise and the Government to provide communities with the support they need to further grow the market.
“Considering how social impact investment can play a role in alleviating the economic crisis will be particularly timely as Government looks at how to allocate further dormant assets.”