Best to borrow? A charity guide to social investment

Best to borrow? A charity guide to social investment

Social investment has attracted huge attention in the UK in recent years, with support coming from a growing number of investors, including philanthropists and grant-making trusts. The Labour government stimulated the development of this market, through its Social Investment Task Force and The Social Investment Business. The coalition government is also committed to it, most notably through Big Society Capital, a new wholesale bank that will start investing in 2012.

At the same time, demand from charities for social investment is increasing. Government spending cuts and a decline in voluntary donations are hitting charities hard, and social investment is seen by some as a way out of this funding fix.

We have produced this report to help charities learn about social investment, find out about its opportunities and risks, and work out whether it might be right for them.

In Section 1, we ask: What is social investment? We explain what it means and how it works, and put right some common Misconceptions. In Section 2, we ask: Should my charity take on social investment? We look at how social investment can influence how effective an organisation is, and compare social investment with commercial investment.We look at the risks that social investment can have, and provide ways for charities to work out whether they are ready to take on an investment. In Section 3, we weigh up five types of social investment, looking at their benefits and risks.