The social investment market is worth £1.5bn, according to a report published today by Big Society Capital.

The social investment wholesaler said the report, The size and composition of social investment in the UK, is intended to be the “first comprehensive estimate” of its size and composition.

The £1.5bn figure is the value of social investments outstanding at the end of 2015.

Key findings

• Social investment in the UK is worth at least £1,536m. This is the value of social investments outstanding at the end of 2015.

• There are nearly 3,500 different social investments outstanding at the end of 2015. Big Society Capital estimates that at least 3,000 different charities and social enterprises currently benefit from social investment.

• Over two-thirds (70 per cent) of social investment is channelled to charities, and social enterprises with some kind of asset lock.  The rest of social investment (30 per cent) is focused on social enterprises and profit-with-purpose companies without an asset lock.

• Higher-risk products are a significant part of overall social investment. Social bank loans to asset-locked organisations are still the single most prevalent product, but products such as social property funds (9 per cent), unsecured loans (10 per cent), community shares (6 per cent), charity bonds (6 per cent), and equity-like products (2 per cent) have emerged strongly in recent years.

• Social investment deal-flow in the 2015 calendar year saw around £427m of deals offered to about 700 charities and social enterprises. It appears that deal-flow has more than doubled in value since 2011, representing roughly a 20 per cent annual growth rate.  A lot of the growth in deal-flow has come via higher risk products.

Big Society Capital defines social investment as “the use of repayable finance to achieve a social as well as a financial return”. It says this helps to “distinguish social investment from philanthropy, in terms of seeking some sort of financial return, but otherwise remains a very broad definition”.

It uses a “three stage segmentation” process to evaluate what is constituted as social investment for the sake of the report. The “first, between the social motivation of investors and users/investees; second, between the focus of Big Society Capital’s current strategy and other areas; third, between the themes and products that constitute our current strategy”.

Matt Robinson, author of the report and outgoing head of strategy at Big Society Capital, said: “We believe that social investment in the UK is now helping thousands of charities and social enterprises. We are seeing a diverse range of different investment products, with quite significant growth in higher-risk forms of capital such as unsecured loans, community shares and charity bonds.

"This research also shows that social investment deal-flow is growing, and is more than double the level of five years ago.”