The biggest constraint to growing the social investment market will be charities' conservatism, not a lack of capital, Sir Stuart Etherington has warned.

Speaking at a seminar at UBM's Responsible Business Exhibition 2012 in London yesterday, Sir Stuart said that the social investment sector did not lack capital: "A retail social investor pops up every other week," he said. "There is not an absence of capital."

He went on to explain that the biggest constraint to the social investment market was the culture within many charities:

"In general they don't gear their balance sheets," he said. "Most lending is done to acquire assets, not working capital. Charities and social enterprises are quite conservative in their world view. There is anxiety there will be sub-prime lending in the voluntary sector, like sub-prime lending in the housing sector."

On a more optimistic note, Sir Stuart said the social investment market would grow, but slowly: "Probably in 50 years time it will be a more significant element of the funding mix.

"It will grow, but it will grow slowly, and the biggest constraint will be charities themselves."