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Seebohm Hill - Connecting social entrepreneurs and social investors to deliver innovative ways of meeting social need

Social Finance in the UK: The Story So Far...

While much has been written about the size, characteristics and growth of the UK social investment market, up to now there has not been any publicly available data on actual transactions. The publication by EngagedX of data on a sample of over 400 loans made over a twelve year period to 2014 by Futurebuilders England, CAF Venturesome and the Key Fund has filled an important gap and, we hope, started a new era of greater transparency in social finance. This paper provides our analysis of the EngagedX data set.

It shows that, with the exception of loans outstanding for less than 12 months, the provision of social finance has not been a comfortable experience in most cases either for the borrower or the lender. Interest rates charged appear to have been higher than social organisations could afford, requiring renegotiation of terms which produced lower rates than originally expected by the lenders. Write-off ratios were high, suggesting that debt funding is not a suitable method for funding much of the social sector and raising questions about the long-term viability of the business models of some of the providers of funds, particularly when ongoing management costs are also taken into consideration. We conclude by offering some suggestions about changes that may help to ensure the development of a healthy and sustainable social investment market.   

Full report here