Beyond our comfort zone: Why it’s worth working across the spectrum of capital

Different types of capital providers have different requirements and goals – and even if they’re keen to work together in principle, the reality is often tricky. But, writes Big Society Capital CEO Cliff Prior, overcome those cultural and practical challenges of collaboration, and the payoff can be significant. The fourth in our Impact Papers series, in partnership with EVPA, asking honest questions about investing for impact

Cliff Prior Big Society CapitalBethany* lives in a low-income area of Bristol, south-west England. Her neighbourhood has never recovered since a major employer in the area closed down in the 1980s; low expectations of opportunities were the norm. But, when the South Bristol Sports Centre was refurbished, Bethany stepped up to lead its youth council, encouraging other young people in the neighbourhood to take part in sports. She and her colleagues spoke eloquently, with visible passion and confidence. When I met them, it was clear to me that expectations had grown among those on the youth council; they clearly had great futures ahead of them. 

These fantastic new facilities were made possible by social impact investment – but not just from one funder. First a local private investor, then a social bond fund managed by a mainstream fund manager (with cornerstone investment from Big Society Capital), then via Social Investment Tax Relief, and finally, a local credit union. Five very different investors whose collaboration added up to £915,000 worth of investment. This financed, among others, six state-of-the-art sports pitches. These not only allow more space in which to engage young people, but also bring in revenue, furthering the centre’s financial sustainability. 

Too often the industry puts precious energy into internal battles – this means we often see only the small picture and miss the big opportunities

Social impact investment can be highly valuable across the spectrum, whether it comes from those investing with impact or those investing for impact (see box). Yet too often the industry puts precious energy into internal battles – on everything from the definition of impact investing, to what we should measure and how. This means we often see only the small picture and miss the big opportunities. Social impact investors across the whole spectrum are small (if global) fish, providing around $500bn in an investment ocean of nearly $300trn. We must realise that all types of impact investors add value in different ways. We would achieve far more by understanding how and where each of us can help, so we can spot opportunities for alliances when they appear.

Investing for impact vs investing with impact

When the term impact investing was first coined a dozen years ago, it was a niche specialism. Today, it embraces investors with a wide range of objectives, behaviours and intentions, so EVPA and its members prefer to distinguish between ‘investing for impact’ – where the primary focus is on achieving a social impact, with any associated financial returns as a secondary objective, and ‘investing with impact’ – where the primary focus is on achieving a net positive financial rate of return alongside social impact.


Different investors can help enterprises using every type of business model, at each stage of their development, from idea testing to expansion, and from philanthropy to trading and public contracts. Grants, flexible capital, impact investment, guarantees and commercial finance all have their place – and can achieve even more when they’re combined. 

To figure out what combination works, it helps to clarify what problem we’re trying to solve. Are we, as investors, trying to help small social enterprises and non-profits to access investment for working capital? If so, blended grant and loan could be the answer, potentially combined with enterprise development support such as that provided in the UK by Access – The Foundation for Social Investment. Are we looking to scale up new technology with a positive social impact? Tax breaks or subsidies, or programmes such as the pan-European Social Impact Accelerator, could be solutions. 

Or are we trying to solve a specific social issue like homelessness, refugee integration, or employment for people with disabilities? The tools required could be any combination of research, sector-specific expertise, government involvement, social movements, and multiple types of finance. If the focus is on improving the system, and we use the right combination of tools required, far more people’s lives will be improved. 

So, what can collaboration achieve when it works well? Here are just a few examples.

Supporting business growth

Oomph! is a wellbeing enterprise for older adults, enhancing mental, physical and emotional wellbeing in care homes and communities. Ben Allen, who founded Oomph! in 2011, wanted to help older people live “a full life, for life”. He took a startup grant, then moved through a venture accelerator to social investment. His model changed several times, pivoting from delivering direct services to training staff in care homes and beyond. He had mentors and partners, and experienced both setbacks and achievements. Now with 3,500 trained staff and 45,000 exercise classes, 98% of the older adults Oomph! has worked with have experienced a positive impact and 70% saw a huge improvement in wellbeing provision. 

What can we learn from this example? A seamless supply of different types of capital along the path from startup to scale is vital: any gap in the appropriate form of finance could have blocked Oomph!’s progress. 

That said, it’s not only money – its success was in part due to securing a contract with a prestigious care home chain, which gave other investors’ confidence in the enterprise, encouraging them to invest. The key message here is that financing alone is not enough: you need a mixture of the right team, business model, enterprise income and investments.

Leveraging more (commercial) capital

CBRE is the UK’s leading commercial housing company, covering everything from development to property management, capital markets to consultancy. Although Big Society Capital’s investment into its Affordable Housing Fund in 2019 was a somewhat modest £10m, we brought much more than money to the table. By working together and building a strong relationship we are helping to support CBRE’s move towards impact investing. CBRE is now working with The Good Economy and Big Society Capital to develop a social impact framework which will ensure impact considerations are incorporated into its investments. With its Affordable Housing Fund, CBRE has brought in £250m of mainstream commercial capital, which will support people unable to rent or buy in the open market.    

Powerful partnerships – beyond investment

People on low incomes often pay more for the same products or services (such as energy bills, credit or food) than those who are better off financially, which is known as the poverty premium. Research shows that 20% of the UK population live in a low-income household, paying a poverty premium of £490 a year on average; for more than one in 10 of these households, costs rise to at least £780. 

To tackle this issue the Joseph Rowntree Foundation and Big Society Capital designed the Fair by Design campaign along with partners including the Barrow Cadbury Trust, working with industry, the government, and regulatory bodies to ‘design out’ the poverty premium. Alongside, the Fair by Design fund is providing capital to companies with innovative solutions in this field, while a number of organisations (including Comic Relief and the Big Lottery Fund), have provided grant funding. Collaboration with so many stakeholders isn’t easy, of course, but can work well with clear leadership, a strong steering committee and good project governance.

Two of the fund’s investees have already had major successes: Wagestream (which aims to help reduce the need for payday loans) closed a $50m round in May, from both mainstream venture capital and social investors, while Incuto (a hosted banking platform for credit unions and community banks) has been appointed as government partner in a pilot savings scheme for credit unions.

Catalytic capital

Globally, the MacArthur Foundation has created what it calls ‘a catalytic capital consortium’: an investment, learning and market development initiative bringing together leading impact investors to encourage the use of catalytic capital. The programme includes a $150m challenge fund to help address financing gaps in impact investing. The potential of such finance has already been shown: in MacArthur’s previous work with the Sustainable Jobs Fund, a $1m repayable investment from the foundation provided risk-taking capital to help unlock $17m of commercial investment. 

Each of these examples shows the value of bringing together the tools needed to achieve impact. 

It can be difficult, but we are here to create positive social impact, not for an easy life

Yes, it can be difficult, as each investor has its own capabilities and restrictions. Investors will always have expectations for their fund managers. Foundations will always need to factor in their specific mission, as well as regulations that limit their activities. Small investors may not have the capacity to deal with the complexities that can arise when working with multiple partners, using a variety of tools. And the commercial and social worlds have different cultures and languages, and there may be trust barriers to overcome. 

But we are here to create positive social impact, not for an easy life. We are all at our most valuable when we are each clear and transparent about what we can do, what we are for, what we prioritise. We achieve the greatest impact when we focus on the social issue and identify the talents and capabilities needed to solve it or at least mitigate it. We all improve more when we are open and share our learning. 

It is rare that any single organisation can solve a significant social challenge, but together, we can achieve amazing results. Together, we already are. 

What are your thoughts on collaboration among social investors? Join the debate on Twitter using the hashtag #ImpactPapers, or drop us a line:

Keen to take this discussion further? Hear from thought leaders from around the world at EVPA's 15th Annual Conference, Celebrating Impact, taking place in The Hague, 5-7 November.

*Name has been changed.