A new research body to support the growing social investment sector has been launched today: the Social Investment Research Council will provide practical recommendations and data to support the burgeoning social investment market. The Council is a joint venture between Big Lottery Fund, Big Society Capital, the Cabinet Office, Citi, and the City of London Corporation.
Reasons for optimism
The UK is on its way to establishing itself as a global leader for social investment, successfully hosting the first G8 Social Impact Investment Forum earlier this year. The UK social investment market grew by almost a quarter last year exceeding the £200 million mark in value for the first time according to our research Growing the Social Investment Market
At ground level there is also reason to be optimistic, with UK social enterprises performing favourably when compared to their SME counterparts, including higher proportions of social enterprises experiencing growth in the last year, and a start-up rate three times greater than SMEs. (See Social Enterprise UK's report, The People's Business here)
Information gap hindering growth
However there remain a number of key challenges for this nascent market. The lack of appropriate data represents one of the largest barriers to its growth, with unanswered questions around investment products (risks and returns, security and liquidity); identifying and meeting market needs, and the needs of key players; unlocking the right type of capital; mechanisms to invest; understanding and assessing social impact - the list continues.
The aim of the Social Investment Research Council is to consolidate research efforts to generate practical insights, for the benefit of social sector organisations and investors. By coordinating efforts, the Council aims to address important issues that are currently less researched, and subsequently help to accelerate market development.
We will therefore focus on projects which consider practical ways to impact the development of the market, with a potential transformative impact. Specifically, the inaugural 2013-2014 research programme will focus on improving the understanding of social investment products, and the investors needed to finance them.
Today the Council is launching its initial two projects. The first of these aims to develop a better understanding of the key characteristics and performance of social investment products (including loans and other investments) over time, looking at historical transactions in the social investment market. The second project focuses on identifying potential institutional sources of social investment capital in the UK –housing associations, pension funds and corporate foundations among others – and investigating the key motivations and barriers to investing they face, to help inform what needs to be done to help unlock this potential capital.
We look forward to partnering with those in the social investment market, to enable us to understand the market’s real information needs and ensure that those needs can be met.
More information about the Council and the two initial projects (n.b. tender closes midday on Thursday 14th November) is available at: www.bigsocietycapital.com/ResearchCouncil
For more on the City of London's Social Enterprise Research programme please visit us the City of London's economic research webpages.