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February 21st, 2017

Social Impact and Big Society Capital in the UK

Big Society Capital was founded in 2012 by the UK government's Cabinet Office, together with a number of UK banks. It plays an important role as a catalyst in the social investment market, promoting and funding the work of charities and social enterprises that address pressing social issues such as  unemployment, recidivism and homelessness.

The initiative

The UK government took action in 2012, creating a vehicle to promote their idea of the big society. "Big Society Capital was launched in April 2012 as a private sector company, independent of Government, with a governance structure involving the Big Society Trust as the guardian of the 'mission' of the organisation. The Big Society Trust was established concurrently as the majority shareholder of Big Society Capital and it has subsequently become the sole Member of Access - the Foundation for Social Investment to fulfil a similar governance role for that organisation."[2]

“Big Society Capital (BSC) has been set up to help make sure that... charities and social enterprises can find appropriate and affordable repayable finance to meet their capital needs. We have two roles - we are an investor and a champion.”[3]

BSC's role as an investor was to "have a transformative impact on the social investment market in the UK by supporting social investment finance intermediaries to become financially robust and able to:

  • "Attract greater and more diverse sources of investment;
  • "Effectively and efficiently channel appropriate and affordable capital to the social sector;
  • "Provide effective financial and business support services to the social sector."[4]

Its role as a champion was to "increase awareness of and confidence in social investment by:

  • Promoting best practice and sharing information;
  • Improving links between the social investment and mainstream financial markets;
  • Working with other investors to embed social impact assessment into the investment decision-making process.”[5]

It has a number of goals for 2017, including:

"Greater availability of smaller-size investments, enabled via ‘blended' capital"[6]

"Greater use of social investment in capital-intensive sectors and products

"More institutional capital attracted to social investment"[7]

"More everyday retail investors involved in social investment and more grassroots and community projects able to access capital"[8]

"Easier access to growth capital for innovative social organisations and interventions."[9]

These goals are consistent with its overall vision of “a vibrant, diverse, well capitalized and sustainable social investment market in the UK, through which charities and social enterprises can access appropriate and affordable finance and support to grow their positive impact on society".[10]

The challenge

There are a number of social issues in the UK that affect disadvantaged people on low incomes and are always difficult to address, partly because of the lack of funding, whether from government or from other sources. “There are lots of charities and social enterprises working hard to deal with some of the most challenging issues in the UK – such as youth unemployment, financial exclusion and homelessness. An increasing number of them want to use repayable finance to help increase their impact on society, for example by growing their business, providing working capital for contract delivery, or buying assets.”[1]

The public impact

In its first few years, it has already invested significant amounts: “Big Society Capital made social investments of £84 million from its inception to the end of the first quarter of 2016.”[11]

The public impact includes the following projects:

  • “250,000 people are benefiting from community energy projects, such as Southmead Development Trust's Greenway Centre (a healthy living centre, social enterprise hub and community centre) which received investment from Pure Leapfrog's Community Energy Fund to install solar panels on its roof to reduce costs and generate income.
  • “1.77 million Passenger trips for community groups and disadvantaged people have been provided by community transport social enterprise HCT, which received investment from the FSE Group and Big Issue Invest. HCT uses commercial contracts to pay for its community transport.
  • “10 social justice organizations now have high quality, affordable office space in the Foundry in London, which was built using finance from a range of social investors.
  • “17,000 loans were made by community lender Moneyline to low income households in 2015, through finance received to scale from Big Issue Invest and the FSE Group.
  • “65% of customers agree that having a digital current account with Ffrees is helping them to manage their money. Ffrees was supported by investment from Nesta Impact Investments.
  • “34,000 patients are supported by Chime, which runs hearing clinics for the NHS in the community. Social and Sustainable Capital invested in Chime to help renovate its building and improve its services paid for by the NHS and private patients.”


Stakeholder engagement

The UK government, principally the Cabinet Office, is the major stakeholder and, because of the initial structure, Big Society Trust, which was established as the major shareholder of BSC to fulfil the role of its governing body. There are four shareholder banks: Barclays, Lloyds, RBS and HSBC. The European Commission is currently a major stakeholder, having committed up to GBP400 million of funds in December 2011 under EU state aid rules.

The third sector stakeholders are the charities and social enterprises to which BSC grant funds and whose engagement it encourages. "To ensure that charities and social enterprises are aware of the diverse range of social investment products that are available, BSC organises events, conferences, webinars, sponsors key sector initiatives and uses digital media to engage as many social enterprises as possible."[13] There is a sense that stakeholders are closely and positively engaged with BSC. “Feedback from frontline organisations during the interviews paints a positive picture of the relationship with BSC. The approachability, professionalism and openness of the Big Society Capital team were noted by several interviewees, as was the organisation's positive influence on growing the market and on how social investment can be used.” [14]

Political commitment

The former prime minister, David Cameron, pledged shortly after the election of the coalition government in May 2010 to establish the Big Society Bank, using “every penny of the English dormant bank and building society account money ... alongside private sector investment … [to] make available hundreds of millions of pounds of new finance to some of our most dynamic social organisations”.[15] This facilitated the creation of BSC two years later, although with a broader funding model. There was a clear commitment from the Conservative party both to the idea of "the big society" and to the BSC.

Public confidence

BSC organised a survey in order to find out what partners and stakeholders thought of its performance. It published a report based on the online survey and in-depth stakeholder interviews conducted by a social innovation communications firm. “Following greater efforts at transparency in recent months, BSC opened a survey in order to find out what partners and stakeholders think of the organisation.”[16]

BSC published a report, Your Views: Big Society Capital Stakeholder Survey Report, based on the online survey and in-depth stakeholder interviews conducted by Matter & Co, a specialist communications firm. The responses were equivocal. “The report found that 69.8 per cent of respondents said the organisation's impact had been positive or very positive, but that charities and social enterprises were the least happy. Only 26 per cent of charities and social enterprises are positive about BSC's ability to bring them more capital... Respondents' opinions about relationships with charities and social enterprises were split - 51 per cent thought the relationship with this sector was good or excellent but 47 per cent thought it was poor or very bad. Charities and social enterprises themselves were also split, with 55 per cent saying that relationships were good but 42 per cent saying they were poor or very bad.”[17]

Clarity of objectives

BSC has defined its vision and mission clearly, along with the target areas where it wants to make a difference such as small and medium sized charities, innovation, participation and scale. Goals are revised every year within these target areas and are aligned towards the organisation's mission. “Our goal is to increase funding for charities and social enterprises. We do this by engaging with existing and potential investors to raise awareness and understanding of the investment opportunities available. We also ensure that new funds and products understand the focus and needs of investors.”[18]

Strength of evidence

Little evidence is available on consultation carried out by BSC on existing organisations of a similar kind. However, the Scottish organisation, Social Investment Scotland, had been been in operation for over 10 years at the time of BSC's inception, and it was fulfilling a similar function as a means of injecting much-needed capital into local communities.


The first relevant feasibility study was carried out under the Labour government 0f 1997-2001.  The Social Investment Task Force (SITF) was set up in 2000 by the then Chancellor of the Exchequer, Gordon Brown, to "look at ways to create wealth and promote enterprise to support economic regeneration and community cohesion".[19] The SITF's conclusion was one that BSC adopted and continues to promote: its founding principle of acting as a wholesaler. "The first report of SITF highlighted the need for a 'specialist wholesale intermediary' to provide new sources of capital to help the social sector grow."[20]

The Commission on Unclaimed Assets, an independent body, published a report: The Social Investment Bank: Its organisation and role in driving development of the third sector, March 2007.[21] The government introduced the Dormant Bank and Building Society Accounts Act 2008 to direct money from dormant accounts to inter alia a social investment bank. In 2009, "The Cabinet Office consulted on the functions and design of this 'Social Investment Wholesale Bank'".[22] There was therefore a detailed examination of the feasibility of such an institution along with a gradual progression towards BSC and the assets that supported its creation.


BSC has a well-established structure of governance, through the Big Society Trust, where roles and responsibilities are clearly defined. The organisation has established three other operational committees, and the board of the Big Society Trust represents a balance of social and financial experience and comprises business and social sector leaders. Regular meetings are organised between various committees to report on BSC's activities and strategic issues. The Trust has high-level governance powers, including the ability to amend the Articles of BSC and to remove directors. “Reflecting this strategic remit, the Board of the Big Society Trust represents a balance of social and financial experience and comprises business and social sector leaders and, ex-officio, the CEOs of sector representative bodies, a nominee of the Cabinet Office and the Chairs of Big Society Capital and Access.”[23]

The Trust has established three other operational committees:

  • The Executive Committee, which is responsible for the day-to-day running of BSC
  • The Investment Committee, which is responsible for making investments and for the performance of BSC's portfolio of investments
  • The Valuation Committee, which is responsible for determining valuations and assessing investment performance, including social impact

The Advisory Board focuses on aspects of BSC's strategy and principal activities. It is "made up of individuals with specific interest and involvement in social investment, including prominent practitioners from the sector".[24]


BSC has defined a range of key performance indicators (KPIs) that it uses to evaluate and monitor both the social investment market and the organisation's performance using KPIs such as "money available to charities and social enterprises and money reaching charities and social enterprises".[25]

BSC is committed to measuring public impact. “It has developed a series of resources to support social impact measurement for social investment financial intermediaries and charities and social enterprises. This includes the Outcomes Matrix which is a tool to support investors and social sector organisations with defining, assessing and measuring their social impact. We have also developed guidance for investors and social sector organisations to plan and measure their social impact. Over the next year we will continue to build on this work with partners from across sectors.”[26]


In order to provide more funding for charities and social enterprises, BSC engages with "existing and potential investors to raise awareness and understanding of the investment opportunities available".[27] As far as its alignment with these organisations is concerned, the picture is largely positive: “Of those people interviewed whose organisations had received funding from BSC, most respondents (87.5 per cent) felt the social investment they received met their needs and delivered against their expectations".[28]

The European Commission found that "BSC's business model contains a number of safeguards to ensure that its investments do not distort competition... or crowd out private investors, thereby distorting competition."[29] It therefore can claim to perform a useful and well-judged role in the social investment space.


Annual Review 2015: The Facts and Faces Behind Social Investment, 2015, Big Society Capital


Big Society Capital has made £84m of social investment, Liam Kay, 18 May 2016, Third Sector


Report: Big Society Capital gets mixed reviews in stakeholder survey, David Ainsworth, 3 August 2016, Civil Society


State Aid: Commission clears aid for the creation of Big Society Capital, 20 December 2011, European Commission

What We Do: Making Social Investment Available to Charities & Social Enterprises, Big Society Capital


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