The most important things in the social investment world right now

As Good Money week continues in the UK, here are the most important things in the world of social investment right now.

Every hour, $87,000 is raised through crowdfunding. Crowdfunding is experiencing a historic growth spurt according to the second-quarter global report on crowdfunding by The Crowdfunding Centre. Across the world, crowdfunding raises $2 million per day. That’s the equivalent of $87,000 per hour, or $1,400 every minute. Currently 90 percent of the world’s online population has access to crowdfunding, according to the report by The Crowdfunding Centre, a London-based industry data analysis firm. “The Internet is enabling a new type of democracy in funding,” said Joe Cox, economist at the University of Portsmouth Business School in a press statement. Crowdfunding now reaches more than 160 countries, according to the report. The US tops the world for successful crowdfunding campaigns, followed by the UK and Canada. 

1.7m people invested £3.25bn in social and environmental change in the UK. A record 1.7 million people across the UK are saving and investing £3.25 billion directly in businesses that create social and environmental impact, according to Ethex’s Annual Report on Positive Investing. The report compiled by Ethex, the UK's online exchange for positive investing (actively investing in businesses with a social and environmental mission), reveals that the positive investment market has grown to £3.25 billion, made up of £2.1 billion saved in credit unions, £862 million in ethical banks and building societies and £249 million directly invested in community share offers, charities and positive businesses set up with the intention of solving social or environmental problems and delivering a financial return.

US to consider passing a Social Impact Bond Act. US Congressmen John Delaney and Todd Young have introduced the Social Impact Bond Act in the US, a new piece of legislation, which if put in place would enable the U.S. federal government to allocate $300 million to SIBs. Intended to save taxpayers money, a social impact bond (a public-private partnership not a bond) uses private capital to fund a social sector organisation as it delivers a contract to address a social issue for the government. If specific social outcomes are made investors get a return on their investment. The legislation would scale up the use of Social Impact Bonds fostering public-private partnerships that harness philanthropic and other private-sector investments to scale up social and public health programs across the United States. 

Germany's largest foundations move on social investment. Last week, 20 of Germany’s largest foundations met at the offices of the BMW Foundation in Berlin to discuss the potential of investing all of their endowments for social as well as financial return.  Charly and Lisa Kleissner, founders of the KL Felicitas Foundation and pioneers of an approach, which means all of their assets are invested for varying degrees of social and environmental return laid out their 100% impact investment strategy. Two large German foundations, one that represents a public charity and another, which represents an individual’s own private capital committed to a similar approach. “There is increasingly broad recognition among foundation leaders in Germany that their social impact needs to go beyond donating from annual budgets,” Ryan Little project manager at the BMW foundation told Pioneers Post. And the Kleissner’s are optimistic about the appetite for change. “We left with the confirmation that Berlin is going to be an important leader in impact investing in Germany,” said Lisa Kleissner in an email interview. 

South Korea looks to implement social impact bonds. CEO of Korea Social Investment Chongsoo Lee announced last week at the Social Enterprise World Forum in Seoul, that South Korea is currently working towards being the first country in Asia to implement a social impact bond model based on those in the UK. "We are currently looking at implementing social investment – particularly Social Impact Bonds – similar to that in the UK and at becoming the first Asian country to do this," Chongsoo Lee told Pioneers Post at the SEWF 2014.

47% of UK charity trustees are unlikely to consider social investment. A UK Social Sector Tracker survey carried out by ACEVO (the association of chief executives in the voluntary sector) found that the perceived complexity of social investment was a big turn off for charities in the UK. Whilst 47% of trustees said they would be unlikely to or would never consider social investment, only 23.6% of respondents said they had ever taken on a loan. The research was featured in in the report ‘Social Investment: The Local Opportunity’ launched yesterday, which concluded that there is widespread scepticism and reticence among local UK charities about using social investment on the ground, despite concerted efforts on the part of the Coalition Government to make the UK a world-leader in social investment.

Billions withdrawn from financing of fossil fuels. Billions of pounds of global investment are being shifted away from fossil fuels into clean green technologies.  Over 800 global investors have pledged to withdraw a total $50 billion over five years, including foundations such as the Rockefeller Brothers, religious groups, healthcare organisations, cities and universities, and the World Council of Churches which represents some 590 million people in 150 countries. Ethical funds are following suit on an issue, which Desmond Tutu has compared to the South African apartheid. “Just as we argued that those who conducted business with apartheid South Africa were aiding and abetting an immoral system, we can say that nobody should profit from the rising temperatures, seas and human suffering caused by the burning of fossil fuels” said Tutu an article written for the Observer.  

‘Social Investment Action Zones’ pushed into UK election manifestos. Scarce meeting places, a lack of capacity and knowledge and a shortage of accessible investment were found to be the main barriers between local charities and social investment according to a report (mentioned above) produced by the UK’s ‘Local Opportunity’ Commission on Social Investment. The report, published yesterday, suggests that to dissolve those barriers ‘social investment action zones’ should be set up to bring together local councils, local charities and local social investors to drive change in these areas. They would be located in areas where there is enough demand for national and local social investment intermediaries to regard these areas as ‘local investment markets’. “Social Investment Action Zones could transform our approach to social problems. The political parties should show their dedication to social renewal by committing to push for Social Investment Action Zones in their election manifestos,” said Stephen Bubb, Chief Executive of ACEVO in a press statement.

UK social investment firm ClearlySo receives £804K investment. ClearlySo, a firm, which raises investment for business, charities and funds that create social impact while making returns for investors, announced that its latest round of equity investment totaled £804,000 and was oversubscribed.  The investment came largely from existing and new individual investors, including Gordon Roddick, co-founder of The Body Shop. Commenting on the difference between this round and previous rounds of investment ClearlySo CEO Rodney Shwartz said in a press statement that “it reflected the change in how the social impact investment sector is seen in general. Commercially-minded angels now see ClearlySo as an attractive investment which is also supporting and enabling dozens of socially impactful firms to raise capital and generate enormous social impact.  We now embody the model we advocate.”

Meet the social enterprises and investors growing the world of social investment at the UK's social investment conference Good Deals from 24 to 25 November.