The UK is the global market leader in terms of social investment. Although it is still gaining traction and there is more distance to cover, there are a lot of positive things happening. For our Social Leadership Network in January 2015, Aleron invited a panel of key stakeholders in social investment (and experts in their respective fields) to share their perspectives on the social investment market – where it is headed in the future, what some of the key drivers will be, and what challenges will need to be overcome to get there. Our panel was made up of:

Marta Garcia is one of Aleron’s advisors and currently works at Social Finance, where she leads their social investment work in Latin America. Marta has a diverse background, from consulting (at Boston Consulting Group, Bridgespan) to banking, and she has worked in a number of social ventures and charities.

Liam Duffy is the Commercial Director for Barnardo’s, where he brings private sector expertise to the charity’s business operations and leads the charity’s growth initiatives, business development activities, and a number of lines of business that have a high growth element for the organisation. Liam comes from a commercial background but has also held a number of functions in the public and social sectors.

Travis Hollingsworth is the Strategy and Market Development Director at Big Society Capital, where he leads on strategy, manages ‘social innovation’ investments, and coordinates the organisation’s international partnerships. Travis also has a consulting background (Oliver Wyman), has worked for Goldman Sachs, and has also held a number of roles within UK charities.

Kieron Boyle is the Head of Social Investment at the Cabinet Office, where he leads the UK government’s efforts to grow the social investment market. Kieron has worked across UK government and is the UK representative to the G8 Social Impact Investment Taskforce and the European Commission expert group on social business. He also previously worked as a strategy consultant (Boston Consulting Group) and consults pro-bono for a range of international not-for-profit organisations.

Opportunities and future direction of the market

There was an overarching appreciation amongst our panellists of how far along the UK social investment market has come in recent years. Marta Garcia says that social investment market in Latin America today is where the UK market was around ten years ago, and Kieron Boyle adds that the UK has “the skeleton of a functioning market” – evident in terms of the number of deals happening and the impact achieved as a result; the infrastructure of the market and the industry that exists around it; and the fact that it is easier and more common for social sector organisations to access social investment finance.

The panellists agreed that there has been a lot of investment into retail or everyday investment. This includes more standard but essential products that Voluntary, Community and Social Enterprise organisations (VCSEs), especially small to medium sized ones, need to exist (e.g., working capital, secured loans, secured debt). The market has opened up and there is more opportunity for smaller players to get involved in a domain that was usually dominated by the very wealthy or charitable foundations. As Kieron Boyle says, “There are a lot more products out there – things like the Threadneedle Social Bond fund, or retail charity bonds – and the social investment tax relief was the Government’s attempt to try and increase the amount of every day investment that was coming in this space.”

All panellists agree that the market is developing in different and exciting ways, and stakeholders want to support diversity as it happens. Although the UK social investment market has broad coverage and is of an increasingly high quality, there is still work to do in terms of focussing investment on increasing efficiency and improving effectiveness. Travis Hollingsworth maintains that an important thing to bear in mind is thatdifferent investors want to get different things out of social investment in the future, and it’s important to understand how that might play out.” A final thought from Liam Duffy is that there should not be any compulsory use of social investment programmes. As he claims: “When you have a programme that you know will work that you could finance yourself, or you could get finance from somewhere else, the fact that you are required to use social investors distorts the credit and supply markets. I also think it feeds the misconception in the sector that social investment is a political tool to open up investment in the ‘poor’ to make rich people richer.” At the same time, Kieron Boyle pointed out that there are currently no government programmes that require compulsory use of social investment, which Liam accepted.

Key drivers in the social investment market


Our panellists all identified that other sectors will play an increasingly important role in the UK social investment market. Although the public sector has been an active player in the market (from commissioning social impact bonds to setting up funds), the perception is that there is more to do in terms of the involvement of the private sector. Travis Hollingsworth mentions the Big Society Capital’s ‘Business Impact Challenge’, through which the organisation would co-invest money to create a corporate venture capital fund, corporate social impact bond, or a joint venture between a charity and a corporate. “The idea here,” he explains,  “is to try and elicit some of the skills, network and leverage that corporates offer to work with charities to have a greater social impact, and not just use their capital and financing in a very monologue way.”

There is a clear trend of moving towards a collaborative way of working in the UK – be it in the shape of funds, of co-commissioning from different areas of Government, and also in the shape of private sector, public sector and civil society all working together. There is an increasing tendency for corporates to feel the need to collaborate and adopt a more social focus. Kieron Boyle gives the example of the Social Incubator Fund, where the commercially-minded organisations that went through the incubator at the same time as social organisations started to pivot their business models to be more aligned the socially-minded models they saw. Many start-ups and businesses are beginning to think harder about how they achieve social value at the same time as achieving economic value. As Kieron adds, “I think the link-up of corporates in the social investment space is hugely important to that.”


This increased involvement of actors from other sectors should in theory have an effect on innovation, and social investment actors are trying to explore how to ensure that various sectors can interact with the social sector in a more innovative way in the future – particularly the private sector, which has been less innovative that the public and social sectors to date.

Particularly from the VCSE perspective, the emergence of new social investment models has been crucial to providing more support to organisations and the beneficiaries they work with. Liam Duffy gives the example of the IAMM Adoption Bond, through which both a higher a higher level of resource can be provided to beneficiaries; and which can also contribute to future savings for Local Authorities, in turn meaning that they have money to invest in more preventative services. Part of the saving also goes as a return to organisation that manages the adoption bonds, who builds an investment fund for growth and also makes a return to investors. Liam concludes: “So it’s very clearly not about re-financing squeezed public services – it’s about finding new money to extend a market in a way that otherwise wouldn’t be done, and in a way that helps children in our case. That to me is a fantastic model and is what we should all try to do.”

Thematic consolidation

Areas like housing and healthcare are currently absorbing a lot of capital, and as a result a number of large funds have been initiated in these areas. Again, this sets the UK apart on the global social investment platform as, in other countries, things are not yet coalescing around big themes as they are here. Elsewhere, more focus has been placed on remediation and creating new services, whereas in the UK we are at a stage where we are eliminating the overlaps across different services and creating synergies across thematic landscapes. The flow of capital to these thematic areas also results in an attraction of institutional investors. However, the challenge then becomes getting traditional financial investors to think about how social investment fits into their landscape.

Challenges faced going forward

One challenge that emerged is how to involve smaller social ventures (or those less familiar with social investment). As an example, to remedy this Big Society is setting up a foundation in partnership with other funders (including the Cabinet Office) to focus on the early stage of the market and try and get more social ventures to a point where they can take on social investment through capacity building programmes. As Kieron Boyle says. “Ultimately, the challenge for the Government is ensuring that the social investment market grows, and determining what role we can play to accelerate that.”

A challenge that Marta Garcia mentions is the need to streamline the way in which UK actors work and, in particular, their processes. She points towards the “conundrum” that intermediaries in the sector are trying to figure out, which is how to simplify the current way of working to ensure that it is less expensive, takes less time, and is more accessible. This is something that will be addressed over time as, with the on-going work of the actors in the UK, the social investment market will evolve to become more efficient. Kieron Boyle points towards the fact that “the theory of social investment clearly checks out, but practically there are blockages within the system. For social ventures, social investment isn’t working as well now as it will in time.”

From a VCSE perspective, Liam Duffy is concerned that people within social investment think that VSCEs are “cuddly toys hiding behind the trees, too frightened to come out because we don’t understand commercial discipline, investment, and finance” – whereas there are different factors at play. Firstly, he maintains, there are big points to be scored by VCSEs applying for funds if they can heavily discount price, which immediately means that the amount of money going through to the delivery agent is greatly reduced.  He adds: “They are also thinking that the margins that they would have made and that would have become unrestricted voluntary funds/general funds that they could have used elsewhere, are now going to someone else. That’s a problem that will turn some people off.”

Another concern voiced by Liam Duffy is that social investment does not encourage capacity building within VCSEs because it means that the organisation is not exercising, maintaining or developing its own strategic management capability, though some of the panel challenged this. Larger VCSEs often struggle to see why they need this type of investment when it is often a role that they could fulfil if they are confident in their capability to deliver. There is also an added tension when another stakeholder manages the overall performance, quality, and work of the VCSE without necessarily sharing their purpose or mission. As Liam Duffy concludes, “I think that there are solutions to these problems, but it’s important to understand that what looks like a level of failure to grasp the concept or to understand the benefit of social investment on charities’ behalf, isn’t always the case – there can be considered reasons why people don’t want to do this.”