The use of collaborative social investment funding for charities by charitable foundations and private sector organisations has been commended in a Cabinet Office report into achieving social impact at scale.

The ‘co-mingling’approach, which sees foundations collaborating with private sector investors to provide repayable finance to charities and social enterprises, rather than providing grants, brings “significant new capital into the market, as well as skills and expertise”, said Nick Hurd, minister for civil society, in his foreword to the report.

There are “at least two” co-mingling funds in the UK and “upwards of 20” elsewhere in the world, the report advises, adding that the approach is growing momentum with many foundations “keenly watching the space”.

Authors advise that this form of social investment is attractive to private sector investors due to the foundations absorbing a significant proportion of the risk, while allowing the private sector investors to achieve some of their corporate social responsibility objectives.

The Cabinet Office hopes to use learning from the report to produce a replicable model for co-mingling funds in an effort to “drive social impact at scale”.

The Cabinet Office worked with the Charity Commission on the report, which showcases seven examples of the growing finance model, including the UK’s Big Issue Invest social enterprise investment fund and the Bridges social entrepreneurs fund.

The case studies outline three key developments in a foundation’s role in social investment, say the Cabinet Office: being creative about using their assets to further their objects; identifying what is distinct about their role as investors, and playing a lead role in expanding the skills and capital in the social investment market.

The Charity Commission said it “recognises that there is growing interest in social investment” and advised that the primary consideration for any charity wanting to make programme-related investment must be its charitable aims. It can only use its funds to further its charitable aims, the Commission reminded the sector.

The report comes ahead of a G8 forum on social investment which will be held in June and forms a key part of the UK’s G8 presidency in 2013.

Read Vibeka Mair's blog on 'Social investment: funding for charities or white-washing of capitalism'.