Today sees the publication of 'Impact Investment: The Invisible Heart of Markets', produced by the Social Impact Investment Taskforce established under the UK's presidency of the G8.
Alongside this sits the work of the UK National Advisory Board, also published today. Chaired by Big Society Capital's Chief Executive Nick O'Donohoe, the UK National Advisory Board held working group sessions, commissioned three separate working groups on priority issues and also commissioned an independent review.
This blog is an extract from the foreword to the report of the UK National Advisory Board.
The UK National Advisory Board to the Social Impact Investment Taskforce was convened in June 2013. Its membership is made up of individuals representing the financial and social sectors in the UK all of whom have played an important role in the development of the social impact investment market in the UK.
The remit of the Advisory Board was to review key developments that had stimulated the growth of the social investment market, and to suggest recommendations to support future market growth. In Chapter 1 we describe the context and the current state of the UK social impact investment market.
It is widely accepted that the UK has been at the forefront of innovation in social investment and in Chapter 2 we seek to show how the UK market has developed since the first Social Investment Taskforce was constituted in 2000. A great many individuals, organisations and all the major political parties have played important roles in developing this market. It would be impossible to list them all in this report and we have therefore included only those organisations and policy initiatives that came after 2000, were explicitly developed to focus on growing social investment, and were mentioned most frequently in our consultations with Advisory Board members and key stakeholders.
We believe our experiences in the UK can be valuable to other G8 countries seeking to develop their own social investment markets and we hope that the global audience for this report will find important lessons, both positive and negative, from many of the innovative approaches adopted in the UK.
In Chapter 3 we have listed a number of recommendations which we believe, if implemented, would help to further drive the growth of our social investment market. In three broad areas the committee has endorsed separate pieces of work led by organisations represented on the Advisory Board (these papers will be published in parallel with this one). These recommendations focus on:
- Stimulating greater demand for social impact investment through improving the capacity of social organisations to appropriately use investment to scale their impact (Building the Capacity for Impact, led by Impetus-PEF)
- Promoting a new culture of Government procurement that encourages innovation and prevention and will open many more opportunities for social organisations in need of social investment (Recommendations on Procurement, led by Social Finance)
- Redefining the social business frontier to ensure that businesses delivering social value can be recognised and will enable them to be supported by social impact investors The Social Business Frontier, led by Big Society Capital, with Bridges IMPACT+)
In addition we make further recommendations which focus on:
- Supporting the growth of smaller social organisations by providing capital that blends both grants and investment.
- Providing greater choice to retail investors by ensuring that they are offered social investment options as part of their mainstream pension plans.
- Encouraging greater disclosure by financial institutions of their lending and investment both to social organisations and in areas of greatest deprivation.
The publication of the Taskforce Report, and the various national advisory and working group reports that accompany it, will highlight the increasing global momentum behind social impact investment. The UK has been at the forefront of this movement for more than a decade. The result today is a rapidly growing marketplace which is providing new and innovative funding options for social entrepreneurs around the country. Much however needs to be done if this market growth is to continue to accelerate and drive systemic social change. We hope that this report will help provide better global understanding of what has been achieved so far in this country and tangible recommendations for the key next steps necessary to build on the important foundation that is already in place.