Holly Piper

Head of CAF Venturesome

Charities Aid Foundation


  20 November 2017

Two recent(ish) reports are excellent, but risk embedding a narrative that downplays the crucial role philanthropic capital has played - and can play - in social investment.

The UK National Advisory Board on Impact Investing (the successor to the Social Impact Investment Taskforce, set up during the UK presidency of the G8) last month published a report on next steps for policymakers and social investors. It makes several excellent and practical recommendations to build an “inclusive and sustainable economy” including:

  • To Pension Providers: develop Pensions with Purpose products - providing capital to impact investing, and responding to consumer demand for such products (as 50-75% of the public want such an option for their pensions)
  • To commissioners: build on the Social Value Act and ensure that social value has a minimum 20% weighting in public procurement tender decisions
  • To businesses: Evidence that businesses which incorporate social purpose increase employee retention, which in turn increases profitability (so commercial self-interest and social purpose in lockstep)

Equally helpful is the inclusion of Bridges’ spectrum of impact diagram - bringing together the goals of different investors across the impact economy and helping everyone make sense of the landscape.

The Rise of Impact_Figure2_TheSpectrumOfImpact_NationalAdvisoryBoard17
Source: UK National Advisory Board on Impact Investing (2017), The Rise of Impact: Five steps towards an inclusive and sustainable economy, p.11. As reproduced from the Impact Management Project


However, the role philanthropic capital has played in the development of the social investment sector is barely touched on. Whilst the UK NAB’s report does not set out to give the history of social impact investment to date, its wide readership and profile is such that the explanation of the ‘Rise of Impact’ potentially does a disservice to major philanthropic funders, such as Esmee Fairbairn Foundation, Social Investment Business, UnLtd, and the 100+ funders of CAF Venturesome.

These funders, amongst others, have played a vital role in piloting social investment, either directly or by financially supporting several of the SIFIs mentioned in the UK NAB report. A handful of the numerous examples include:

But they are conspicuously absent from this report.

For different reasons, David Floyd’s excellent and, as always, thought-provoking paper on government subsidy risks downplaying the role philanthropic capital has played. To date, government, government-backed funds, and the Big Lottery Fund, have provided £1,063m of subsidy to social investment. Yes, that’s £1 BILLION of subsidy. Now, David does make the point (which I strongly agree with) that there is a “distinct role” for philanthropic capital, and that the spectrum (philanthropic to ‘commercial’) is not binary. Nevertheless, taken together these two very different reports (different perspectives, different audiences, different aims) risk embedding a narrative of social investment which massively downplays the role of philanthropic capital.

Does this matter? Yes! The risk of downplaying philanthropic capital is that collectively we don’t consider our full suite of tools to drive social impact.


The growth of social investment - and in particular the potential of bringing in more responsible, sustainable and impact-driven capital (as per the diagram above) - will be genuinely transformative. And much of this growth will have a dependency on the catalytic and risk-taking role philanthropic capital plays in so many different ways - be it blended finance (e.g. Access Foundation), impact-focused high-risk social investments (e.g. CAF Venturesome), funding for additional support to investees (eg. CityBridge Trust), and much more. Rewriting the narrative (however unintentionally) to leave out philanthropic capital risks neglecting these hugely valuable tools. And the prize of huge social impact is simply far too valuable for us not to consider every tool in our toolkit.


Visit our website, contact the team on 03000 123 300 or email us at venturesome@cafonline.org and we’ll be happy to help.