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Nesta announces £1.2m in social investments as research reveals low returns is no barrier
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Four organisations trying to develop the social investment market will receive £1.2m in investment from the nation’s innovation foundation Nesta and the charitable foundation Panaphur Trust.
The announcement of the four today, from a shortlist of 20, comes at the same time as new research reveals investing in social enterprises for most investors will mean receiving low financial returns – but for almost half of investors this is not a turn off.
Investing for the good of society: Why and how wealthy individuals will respond conducted by The Fairbanking Foundation with Ipsos MORI found that 39 per cent of those with £50k to £1m to invest were interested in social investment and the potential for low returns was not a barrier to involvement.
In the video interview featured here Joe Ludlow from Nesta’s Public Services Lab, a 2010 Clore Social Fellow leading Nesta’s research into the Big Society Bank (BSB), talks about how the BSB can capture the interest of this ‘mass affluent’ market.
He says: ‘A small amount of money can be used to leverage in a multiple from those individuals who are out there.
‘There is a need for an investor whose interest is primarily developing the market, who uses money to catalyse a greater flow of money from other investors…that’s the sort of thing the Big Society Bank could be.’
However, he adds: ‘What must be clear is that the social investment market does not produce commercial rates of return.’
Ludlow also talks about the four organisations chosen to receive investment from Nesta’s Big Society Finance Fund and how they demonstrate a broad range of social investment areas.
Finance South East and Resonance will bring more angel investors into the social enterprise space, Charity Bank will help household name charities and social enterprises to raise finance through a bond structure, Fair Finance is an east London based microfinance institution expanding its operations through structuring deals that will also be of interest to commercial banks, and Impact Assets is developing products that will help turn more of the ‘mass affluent’ into social investors – thus testing out the results of Nesta’s research.
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