More than £1bn of social impact investment has been injected into the UK over the past year, Big Society Capital’s annual market sizing report has found.
Last year, the London-based social impact investor found it had reached £6.4bn in 2020, rising to £7.9bn in 2021.
Of this, 82% has been committed to charities and social enterprises based outside London, and 60% to those in the UK’s most deprived communities, which are twice as likely to struggle with household bills.
“We know there is more that can be done to address the regional inequalities that exist,” said Julia Lenon, portfolio and data manager at the firm.
“This data suggests social impact investment has a key role to play in reducing them.”
With the cost of living crisis putting increased pressure on communities and the UK chancellor’s latest fiscal announcement doing little to alleviate this, seven million UK households are estimated to be in fuel poverty this winter and many are struggling to afford food.
Big Society Capital CEO Stephen Muers noted interest in this area of investment is “particularly timely”.
“As the economic crisis worsens, the need for social impact investment to support social enterprises, charities and community enterprises will be ever more critical,” he said.
“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.”
See also: – BSC’s Stephen Muers: Social investment must offer more than a sticking plaster
Big Society Capital’s market sizing 2021 report found 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.
Housing and social lending
Social and affordable housing funds, which aim to provide safe, affordable homes for tenants who might struggle to access mainstream housing such as women fleeing domestic abuse, continue to account for the largest segment of the total market at £3.8bn.
Look out for ESG Clarity’s Green Dream video with Resonance Women in Safe Homes Fund manager Sarah Haynes later this week.
Social lending – which is generally used by social enterprises, trading charities and community-based enterprises that struggle to access mainstream finance – is the second largest segment at £3.3bn.
Looking ahead, Impact Investing Institute CEO Sarah Gordon said: “Now we need to see greater collaboration between government, institutional investors and social investors so that different sources of capital can work together more effectively to reduce regional inequalities across the UK, and deliver positive social and environmental impact as well as a financial return.”
