Global social innovation round-up #31: Impact investment special

UK social investment is worth £1.5bn announces Big Society Capital

The value of social investments outstanding in the UK at the end of 2015 was at least £1.5bn, concludes a new report published by social investment wholesaler Big Society Capital (BSC). It also estimates that at least 3,000 different charities and social enterprises currently benefit from social investment, with over two thirds of all social investments made being channelled to charities and social enterprises with some kind of asset lock.

BSC’s outgoing head of strategy Matt Robinson said: “We are seeing a diverse range of different investment products, with quite significant growth in higher-risk forms of capital such as unsecured loans, community shares and charity bonds. This research also shows that social investment dealflow is growing, and is more than double the level of five years ago.”

In the 2015 calendar year social investment dealflow saw around £428m of deals offered to approximately 700 charities and social enterprises. BSC’s new CEO Cliff Prior commented: “Big Society Capital’s job is to make sure that charities and social enterprises can get the investment they need to do more of their fantastic work. It’s vital to have a good understanding of where social investment is today, as the starting point to chart a course for the future. This report helps with that, and builds on Big Society Capital’s commitment to improved data and transparency around social investment.”

The GIIN ups its impact measurement game

The Global Impact Investing Network (GIIN) has this week launched IRIS 4.0 – an updated version of the IRIS catalogue of social, environmental and financial performance metrics used by social impact investors. The updated impact measurement tool now features metrics specifically designed to measure the performance of investments in agriculture, education, financial services, housing, community development and land conservation.

Impact measurement is a core component of impact investing

CEO of the GIIN Amit Bouri said: “Impact measurement is a core component of impact investing, allowing investors to better understand, manage, and communicate the social and environmental performance of their investments… IRIS 4.0 brings us one step closer to a market in which investors prioritize impact alongside financial performance — measuring their investments with IRIS metrics, setting targets, and managing their portfolio to maximise results.”

For more information on IRIS 4.0, click here.

Israel launches social impact bond to tackle Type-2 diabetes

Social Finance Israel and partner UBS will raise $5m from private investors to fund a series of two-year lifestyle interventions for 2,250 patients at risk of developing type 2 diabetes. If the interventions are successful in averting the disease, two Israeli public health organisations and the National Insurance Institute will repay investors in return for the savings in the reduction of healthcare and disability costs.

The Israeli Diabetes Social Impact Bond is the first of its kind and aims to provide a template for similar initiatives around the world. The International Diabetes Federation predicts that the number of diabetics could grow by 50% in the next 25 years. There are currently 415 million people living with the condition and global public health spending on diabetes is predicted to rise to well over $800bn a year by 2040. 

Yaron Neudorfer, CEO of Social Finance Israel: “If the pilot is successful, the Israeli health system will have sufficient tools to scale diabetes prevention to many more people. This innovative public-private partnership, driving government resources toward effective social services via an outcomes-based contract, could and should be tailored to the needs of governments everywhere.”

The SIB-funded programme in Israel will launch in July, operating in three annual cohorts. The first results will be measured two years after the beginning of the first cohort.

£50m for charitable bonds in Scotland

The Scottish government is to invest more than £50m in charitable bonds over the next two years, which will provide the resources to support almost 1,000 new homes, after working with social investment charity Allia.

Four housing associations will benefit from this year's £25m bonds – Kingdom in Fife, Eildon in the Borders, Orkney and Ayrshire. A further £25m is earmarked for 2016-17. The bonds, issued by Allia, provide a new source of finance for housing associations to build around 750 new affordable homes, while interest on the loans provide grants for 200 social homes.

Orkney, Scotland

Speaking after visiting a Kingdom Housing Association development near Dunfermline, social justice secretary Alex Neil said: "Innovative financing schemes such as charitable bonds will play a major role in our approach to supporting a major expansion in housing supply over the next parliamentary term.

“Between 2013 and end of March next year we will have supported the building of more than 1,000 homes by investing £62m in charitable bonds, the only Government in the UK to do so. The bonds are ethical financial products that are providing housing associations in Scotland with easily accessible development finance for new affordable homes.”

$5m social investment fund in Canada receives backing from Branson

A $5m fund run by Toronto’s MaRS Discovery District and backed by Sir Richard Branson’s Virgin Unite Foundation, is about to make its first investments. The fun was first launched in 2014 to invest in early-stage Canadian companies that are motivated by a desire to tackle a social or environmental issue and have the potential to generate strong profits. It is currently looking to close two seed-stage investments for $250,000 each in the health and education markets.

Business as usual should no longer be an option, we have to make business a force for good

Branson said: “Business as usual should no longer be an option, we have to make business a force for good. By supporting entrepreneurs that put their people, and the planet first, we’re going to help build successful companies. The MaRS Catalyst Fund is well placed to give these aspiring leaders the investment and mentorship they need to get ahead and find a new way to do business.”

Investment Director at the MaRS Catalyst Fund Kathryn Wortsman commented: “We have no shortage of entrepreneurs who are finding innovative ways to push social progress or tackle environmental problems while making profits, but there was a gap in the market for early-stage funding. MaRS Catalyst is helping to address that.”

Charities Aid Foundation launches retail charity bond

Retail Charity Bonds PLC has this week announced the launch of the Charities Aid Foundation Retail Charity Bond, which is the third bond to be issued through the platform.

Retail Charity Bonds PLC was set up as an issuing vehicle to enable UK charities to raise medium term debt finance through bonds issued to retail and wholesale investors. The CAF Bonds will pay a fixed rate of interest 5% per annum, payable twice yearly with the first coupon payment being made on 12 October 2016. The Bonds are expected to mature on 12 April 2026 with a final legal maturity on 12 April 2028. At any time during the life of the Bond, investors are permitted to sell the Bonds on the open market through their stockbroker.

John Low, CEO of CAF, said: “CAF has a 90 year record supporting civil society by helping people to support charities safely and effectively and helping charities make the most efficient use of their money. The funds raised from this Retail Charity Bond will enable us to further our work in a variety of ways, including expanding services for donors and for charities through CAF Bank.”

Social Enterprise Scotland calls for new thinking around social enterprises

The membership body for social enterprises in Scotland has launched a new manifesto ahead of the 2016 Holyrood elections in May. The manifesto will form the basis of Social Enterprise Scotland’s campaigning over the course of the next Scottish Parliament. It calls for new thinking around public services stating: “The typical model for public services should be social enterprise, democratic and local – not large, distant and corporate.”

Duncan Thorp from Social Enterprise Scotland said: “Influencing the 2016 Scottish Parliament election candidates with our new election manifesto “For the Good of Everyone” is the starting point, as we seek to change and improve the policies of The Scottish Government and Parliament and public bodies over the next few years.”

To read the 2016 manifesto in full, click here.