Who should be a social investor? Should social investment be the preserve of big financial institutions, charitable foundations, large companies and high-net-worth individuals? Or should this be accessible to regular people who identify with a social issue or a community and want to do everything they can to help?
We think there is tremendous potential for people to play an important role in social investment across the UK. They care about the social issues, may want to be further engaged with a charity or social enterprise they invest in, and together, could help provide the type of capital the sector needs at scale. In the long-term, we think millions of ordinary people could be connected to charities and social enterprises through their saving and investing choices.
The UK has made solid progress in engaging the general public in social investment already. We know there are now around 55,000 people with a social savings account, and over 60,000 have invested in community shares since 2009. We would like to see much more. Recent research reports comment on the scale of demand from people for ways to use their money more responsibly, particularly millennials, but we currently don’t have enough products to match. To think about how to address this gap, we have looked at how other countries have developed retail social investment in our new paper launched today - Retail social investment across the world.
So what have we learned from others so far?
First, some countries have confounded the critics to achieve real scale. The Calvert Foundation in the US has raised $1bn from 15,000 individuals, and in France, over a million people have invested €6.5bn into a range of solidarity investment products.
Second, innovative intermediation is often needed to connect individuals to social causes. Banca Prossima in Italy shares investment opportunities in community organisations with local people through a crowdfunding platform, encouraging their take-up because investors have a guarantee that offers will be completed. In the Netherlands, banks package up environmental investments into project-based and fund products that meet the specific needs of investors. In the US, the Calvert Foundation is deploying technology to allow people to invest as little as $20 and directly tell powerful stories about the impact of their investments.
Third, maintaining people’s trust in the investments is vital. This trust can be built through an independent body to verify the social nature of savings or investment options, which Finansol does for solidarity investment funds in France. Or it may take the form of Government endorsement, requirement or incentives, common to approaches in Denmark, Netherlands and France
The international experience has demonstrated that a range of models exist for developing retail social investment, however they are still deployed in relatively few countries. It reminds us that we need to continue to share knowledge about what is working and what isn’t amongst our broader international community.
People-powered social investment is a big opportunity for the UK, and it’s time to think global about how to make it happen.
We are interested to hear comments and feedback on the paper, and if you would like to see (or you can) bring any of these international approaches to the UK. Please contact Camilla Parke with any thoughts.