Big Society Capital announces first investment commitments as report reveals demand for social investment could grow to £1 billion by 2016

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Big Society Capital, the world's first social investment bank, announces details of its initial investment commitments, totalling £37 million, as report reveals demand for social investment could grow to £1 billion by 2016

Big Society Capital's investments back social finance intermediaries that directly fund social enterprises or infrastructure for the market.

Big Society Capital’s CEO, Nick O’Donohoe said:

“Big Society Capital has made significant progress since our launch and we are on target to make investment commitments of around £50 million by the end of 2012. The quality of commitments made so far is encouraging and they reflect diversity of investment type and by geographic region in the UK.  The Guildhall event is an opportunity for City professionals to explore how they can further engage with this initiative.”

The announcement comes as a report reveals demand for social investment could grow to £1 billion by 2016, and as the City of London Corporation announces its own £20 million social investment fund.

The report, authored by The Boston Consulting Group, finds that demand in the social investment market in England could reach £1 billion by 2016, six times what it is today. In the first attempt to establish the future size of the social investment market, BCG found that more government contracts, private consumer spending, and corporate social investment will be directed toward charities and social and community enterprises than ever before, and as a result, the demand for capital in the social sector could grow at 38% a year.  A second report, just published by the International Centre for Social Franchising, shows how some of this demand will come in the form of social franchise models, providing new opportunities for both investors and social enterprises.

Adrian Brown, Principal at The Boston Consulting Group who led the BCG research, commented:

"Social investment is clearly a market ready for growth. There is increasing interest from commercial and other investors, and growing demand for capital from social organisations. There is continued need for strong, positive action from donors, commissioners, investors and market intermediaries."

Signalling an increase in interest in the social investment market, The City of London Corporation have launched the Social Investment Fund (CoLCSIF) which will play its part in building a thriving social investment market by making both direct and indirect investments. The fund has a principal focus on London-benefit but is also interested in opportunities across the UK and internationally.

The City of London’s elected Policy Chairman Mark Boleat commented:

 ‘’The City of London Corporation see social investment as a vital way of financing the services delivered by charities and social enterprises.  It can create better results and value for the public by unlocking the resources and skills of the financial sector. At the same time, this emerging investment category responds to an urgent question facing the City, which is how to put the word “service” back into Financial Services. The City of London Corporation will therefore be announcing details of its own £20 million investment allocation towards the social sector at the Guildhall on Thursday evening. It is hoped that the rest of 2012 will see other city institutions following suit.’’

Full details of investment commitments on Big Society Capital's press release.

Read the Boston Consulting Group's report

Read the International Centre for Social Franchising's report