The UK’s social impact investment market grew to £10bn at the end of 2023, according to annual data from Better Society Capital (BSC), due to an increase in loans to charities and social enterprises.
Loans to charities and social enterprises increased by 16% year-on-year to £4.1bn in 2023, driven by charity bonds, increased bank lending and debt funds.
The growth in lending highlights the sector’s potential to attract more capital, BSC’s report states.
Overall, the social investment market grew by 7% overall from £9.4bn in 2022, BSC’s figures show, with social housing investment remaining stagnant at £5.1bn for the last two years.
BSC also estimated that endowments and charities are the second largest investor group, committing 14% of all capital invested, with pension funds making up 21%.
Calls for collaboration
BSC, named Big Society Capital when it was established in 2012 under David Cameron’s government, called for partnership from the new Labour government to unlock more social impact investment.
Stephen Muers, chief executive of BSC, said: “It is a source of encouragement that the UK social impact investment market grew once again last year.
“However, we must not lose sight of the significant challenges ahead, whether that’s in housing, social inequality and the disparity in health and wellbeing across the UK.
“As we look to the future, it is crucial for investors, businesses, and the government to work closely together to channel investment towards organisations that need it.
“With the Labour government’s focus on growth, we have a unique opportunity to shape policies that encourage more capital into impactful projects that benefit society, ease the burden on the treasury and support the economy.”
Minister: ‘We want to see more projects being funded’
Civil society minister Stephanie Peacock said: “Labour has a proud history in this area – with Gordon Brown setting up the idea of impact investment from social bonds.
“As we set our priorities as a mission-driven government, we look forward to continuing this legacy by championing the growing impact investment sector, who harness the innovation and entrepreneurship in our country and direct it towards a common good.
“From assets of community value to cooperatives – we want to see more projects being funded where they are needed most.”
BSC’s investor composition data was based on an analysis of over 1,000 investors, while its market sizing figures were calculated from more than 100 funds.
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