Under strict embargo until 00:01 Monday 21 November, 2011

First quantitative survey of social investment in England finds £165 million of investment in 2010 dominated by secured lending.

The social investment market in England remains small and dominated by a few large players a new survey published by the Boston Consulting Group and the Young Foundation reveals. But growth ambitions are high with 75% of social investment and finance intermediaries (SIFIs) saying they plan to expand their investment activities over the next three years.

London, November 21, 2011- Lighting the touchpaper, a new report published by The Boston Consulting Group and The Young Foundation on the social investment market in England describes a market which saw £165 million of investment in 2010 dominated by secured lending from four social banks. This is a long way from the popular vision of social investors taking risks to stimulate growth and innovation in social enterprises. In fact, the report reveals that only 5% of the investments made last year were categorised as equity or quasi-equity.

However, growth expectations in the market are high with 75% of SIFIs saying they plan to expand over the next three years with an average expected growth in funds under management of 35% p.a. The authors estimate this to be equivalent to an additional £650 million capital requirement across the sector.

Lighting the touchpaper is based on research commissioned by Big Society Capital and represents the first comprehensive, quantitative survey of the emerging social investment market.

Commenting on the report, Nick O'Donohoe, chief executive of Big Society Capital explained "what's been lacking, until now, is a comprehensive survey of the social investment market that goes beyond case study and anecdote to provide real data on the different players, their finances and their business models. That is why I believe this report is so important. For the first time we can put numbers on many of the hunches, observations and beliefs that have been debated in the sector for some time."

The authors identify six actions that together can unlock the full growth potential of the sector:

• Create more 'investible' business models
• Improve financial skills and experience in the social sector
• Develop a better understanding of risk and how to price it
• Improve commissioning capabilities
• Improve metrics and independent audit
• Address the distortive effects of grants and 'soft' finance.

"Throughout our research we were struck by the energy and optimism in the sector driven by a passion to create positive social change. It is this passion which needs to be channeled into achieving rapid growth over the coming years by creating high-quality investment opportunities, attracting more diverse sources of capital, and addressing some of the structural challenges in the market", says co-author Adrian Brown of The Boston Consulting Group.

Will Norman, Director of Research at The Young Foundation who co-authored the report, commented: "There is great potential for social investment in England to bring in fresh sources of financial capital and provide new funding for civil society. However, this report highlights the need to build a better understanding of the necessary conditions for social investment to flourish. For example, it will be important that investors have confidence in their investees, which may well require an enhancement of current skills".

Survey Methodology:

The Boston Consulting Group and The Young Foundation conducted a survey of social investment finance intermediaries (SIFIs) in July 2011. A total of 35 interviews were conducted either face-to-face or over the phone. These were supplemented by an additional 24 web surveys.

To receive a copy of the report or arrange an interview with one of the authors, please contact Claire Hopkins on +44 20 7753 8334 or claire.hopkins@bcg.com.

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About The Young Foundation

• The Young Foundation brings together insights, innovation and entrepreneurship to meet social needs. We have a track record of over 50 years success with ventures such as the Open University, Which?, the School for Social Entrepreneurs and Healthline (the precursor of NHS Direct). For more information, please visit www.youngfoundation.org.