Social Investment: Revolution or Bubble?

New Philanthropy Capital (NPC) recently held a roundtable to get to the bottom of whether social investment is a revolution in financing, or a bubble about to burst?

Over 30 delegates, including CAF Venturesome’s Paul Cheng, gathered together to discuss their observations on what direction the social investment market is heading in - and what needs to be done to help get there.

There was no conclusive answer, but the main points were:

-       Suitable infrastructure (regulatory and tax environment) must be in place to encourage social investment;

-        The lending infrastructure should be strengthened to ensure a good supply of capital, especially with the commencement of lending from Big Society Capital this year;

-        A diversified range of investors is required. At the moment investors tend to be grant-makers and high net worth individuals; to increase this there should be ‘dedicated capital raisers’ or salesmen;

-        ‘Investment ready’ charities and social enterprises are necessary for responsible borrowing and lending;

-        Impact measurement is needed for investors to know the social return of their investments.  A single measure of social return may be beyond the what is required, but consistency within specific sectors would be helpful.    

Venturesome endorses all of the above conclusions - and agrees there is work to be done in each of these key areas.  We would also add that the social investment market needs efficient matching of supply and demand (with more intermediaries), using a whole range of financial instruments, in order to become robust. 

For more information about the NPC roundtable, both NPC and The Guardian have great articles about it.