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Social Investment – how big is it?

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I sometimes think applying for social investment is like standing at the bottom of the Three Gorges Dam with a small cup, and asking for some water to make a cup of tea. You shout up at a person standing at the top of the dam to ask for some water. “Hang on a minute” they say, and go off to turn a wheel to release some water from the dam.  What you get is a huge gush of water out, at great speed, surging out with the potential energy of the water behind the dam. It sweeps away your little cup and if you are not careful, takes you with it.

It is not the fault of the poor worker at the top of the dam. They have to contend with resources built for a size and scale of operation unsuited for the subtlety of tea making, let alone sympathy.  

So what do the big dams look like, that are applied to social issues here in the UK?

Central and local government spending in the UK in 2014 is budgeted to be £714 billion pounds. Health, education and welfare spend, areas most directly related to social investment causes are some £220 billion.  

All civil society organisations had an income of £181 billion of which voluntary sector income was £39 billion, £13 billion of which was from government sources (NCVO). 

Our best estimate of the flow of social investment to social sector organisations in 2014? £200 million - £300 million? If these are the flows out of the big dams of money to society, our flow of funds is like filling our cup with the spray.  

If you ask the question “is social investment relevant to my organisation,” looking at these numbers, the only statistically significant answer to a 99% confidence level is “no.”

Yet that said, the CBI points to a £250 billion infrastructure investment need in the UK in 2105, “the majority of which will have to come from the private sector.” These are substantial amounts of money.  The opportunity of social investment is in its potential channel these pools and lakes of money to even more social purposes.

Do we miss whole parts of the social investment market?  Housing Associations, providing affordable homes, raised £3.8 billion in 2012/2013, in private placements and bond offers (Homes and Communities Agency, Inside Housing).

Jamie Hartzell of Ethex sees a positive investment market of £3.2 billion in 2013.  Within this, credit union and social bank savings grew 29% to £1.86 billion, direct investments (community share issues, charity bonds) from £140 million to £249 million. Using a like for like comparison with the previous year (which did not include Northern Ireland credit unions), the market grew by £400 million last year.

So a combination of Jamie’s positive investors and housing associations saw money flows of £4.2 billion into social sector investment. It is still a fraction of the total flow of income to social sector organisations, and only a fraction of it is intentional social investment.

<>Looking at these, getting more than a cup full of spray off the side of a dam seems a possibility. We are getting a good flow now – we just define it away because we have succeeded and it is no longer a market failure.  

So, social investment – statistically insignificant? Yes. Social investment – at scale and doing good? Yes. Pick your viewpoint and state your view accordingly. 

Read part five: Four Views of Social Investment or, the Resolution of Travis' Moment of Despair

This blog is number four in a series of five looking at Understanding What Social Investment Is

Last updated | 
23 December 2014

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