Big Society Capital (BSC) says it wants to help the social investment market double in size by 2025.
This would see the market grow to at least £10bn over the next four years, with suggestions it could increase to as much as £15bn.
BSC announced its plans as part of a new strategy, published this morning, and said it wants to support social entrepreneurs as their work moves “to the next level”.
BSC's new strategy has been published to coincide with the organisation’s ten-year anniversary. It was established in 2012 with £600m from dormant bank accounts to support and grow social investment in the UK.
The organisation said in a statement that the social investment sector could help relieve financial pressure on the government as it deals with the costs of the Covid-19 pandemic.
The size of the social investment market was estimated at £5.1bn in 2019, measured by the outstanding value of social investments on balance sheets, which BSC believes could rise to between £10bn and £15bn by 2025.
James Westhead, head of engagement at BSC, told Civil Society News that the organisation's work in the social investment market so far had contributed to its “six-fold growth in eight years, up to 2019, and that is double the rate of growth of the financial sector globally. So there is a momentum which we are wanting to build on around social impact investing.
“£10bn to £15bn sounds ambitious but, given our track record, we think it is achievable. It is not going to be easy. None of this is easy. But it is possible”.
The strategy document says BSC will intervene in four priority areas “where there is greatest potential for scale of impact and where we believe we can make the biggest difference”.
This will mean more investment in building social and affordable housing, the strategy says, as well as backing financial solutions such as venture capital investment in socially-minded technology start-ups, lending to social enterprises in deprived communities, and contracts based on social outcomes.
As part of this work, BSC is looking to scale-up the Social Impact Trust, which it recently launched with the asset management firm Schroders. Schroders says the Trust will meet growing investor demand by providing “access to a diversified portfolio of high-impact private market investments within a liquid investment vehicle”.
Westhead stressed that everything in that vehicle would have to meet the criteria for social impact that BSC already applies for its own investments.
Social impact and financial returns
Stephen Muers, chief executive of BSC, said the investor is “proud to have supported the social impact investment market in its recent successes – from growing from £830m in 2011 to £5.1bn in 2019, to staying resilient amidst months of uncertainty”.
Muers expects that BSC “can play a part in driving the next stage forward”.
He explained: “It is an extremely significant time for social impact investing. The pandemic has highlighted the need for sources of capital to address entrenched social challenges and inequalities.
“We are seeing more investors than ever – from individuals to private institutions and public bodies – wanting to achieve social impact alongside financial returns.
“BSC has an important role to play in seizing this opportunity as we build on our track record of supporting the market, and we look forward to working with partners to take this movement to the next level.”
Last week, the influential right-of-centre think tank Onward called for reform of BSC so that it could invest more widely in commercial companies “with social co-benefits” as well as charities.