‘Research council’ formed by industry leaders to deepen social investment market

Five of the leading organisations in the social investment market have collaborated to launch a research body that will seek to maximise the benefits for socially-motivated investors by enhancing knowledge within the sector.

The Big Lottery Fund, Big Society Capital, Citi, the City of London Corporation and the Cabinet Office have joined forces to set up the Social Investment Research Council.

The five say the council’s ultimate aim is to “generate powerful and practical insights for the benefit of social sector organisations and investors”.

In its first year of operation, it will focus its efforts on better understanding the investment products currently on the market and the kind of investors they seek to attract.

Nick O’Donohoe, CEO of Big Society Capital, said, “The council will focus on projects with a potential to transform the social investment market, working in partnership to help understand what information is needed and ensure that those needs can be met.

“There is a lack of information in the market about how to deliver the right kind of investment products to attract investors, and the industry must work together to commission research to help us meet this challenge.”

Speaking at an event during National Ethical Investment Week, Big Society Capital chairman and social investment guru Sir Ronald Cohen described the ability to measure social outcomes from investment as “breakthrough thinking”.

He pointed towards the success of social impact bonds, and said that by investing to tackle issues such as homelessness, adoption, early education and early detection of diabetes, no longer did investment products have to be judged solely on the financial returns they generate.

The coalition government, which launched Big Society Capital in 2011, has backed social and impact investment since coming to power in 2010. Speaking ahead of the G8 summit in June, David Cameron said social investment “can be a great force for social change on the planet”.

He subsequently announced tax reliefs for social investments, set up a Social Stock Exchange to measure their success, and revealed communities that were buying local assets would be getting better help from the government.

Civil society minister Nick Hurd said the launch of the research council “marks an important milestone in the government’s commitment to building the social investment market in the UK.”

He added, “It is an exciting example of what can be achieved by genuine collaboration across government, the social sector and the private sector.”

A survey conducted by the ethical bank Triodos ahead of National Ethical Investment Week found that nearly 3 million investors could consider social investment within the next year, suggesting the appetite among investors for products that combine profit with purpose was strong.

Further reading:

Finance that turns people’s lives around: social impact bonds

Cameron: ‘social investment can be a great force for social change on the planet’

Third sector urged to up its game to capitalise on new social investment measures

Sir Ronald Cohen: measuring of social investment outcomes a ‘breakthrough’

Triodos survey says 3m may consider social investment in next year