On 6 June, the United Kingdom will host the G8 Social Impact Investment Forum. This meeting is another major milestone in the growth of social impact investing, which is investment capital placed in businesses and funds with the specific aim of creating measurable social or environmental impact alongside a financial return. The decision by the United Kingdom to choose social impact investing as one of the key themes of its G8 presidency, and the endorsement by the G8 membership of that decision, demonstrates how prominent a topic social enterprise, social entrepreneurship and social impact investing has become. It is now on the agenda of senior politicians and policy-makers around the world.

The development of social impact investing is important on many levels.

For investors, it offers a chance to dedicate at least some part of their investment portfolio to projects that can create real social value. Numerous surveys indicate that up to 70% of investors want this option, yet to date very little has been offered to address this demand.

For politicians, impact investing offers a new source of funding. It is not grants, it is not aid and it does not require additional taxes. It targets critical issues in our societies and communities which governments have either failed or cannot afford to address. It brings greater accountability, discipline and financial rigour to spending by focusing on and paying for measurable social value.

For charities, aid organizations, social entrepreneurs and social innovators it brings a new source of capital, unencumbered by bureaucracy but driven by a focus on what outcomes organizations actually achieve rather than on what they say they can achieve. Just like commercial investing, it rewards and feeds successful organizations with additional capital but also highlights failure and starves capital from those who cannot deliver tangible results.

This new form of investment promises much. But in order to turn on the tap and release a flow of funding we need to build the plumbing to support it.

Governments have a huge role to play in designing and building this plumbing. They need to support new intermediaries to reinforce the growth of social investment and encourage new financial instruments such as social impact bonds. They need to build a financial regulatory regime that recognizes social motivation in addition to financial motivation. They need to encourage the development of better ways to measure social impact and harmonize these measures across national boundaries. They need to sponsor new legal forms that embody both social and financial objectives and a tax system that encourages more enterprises to embrace this governance structure.

So there is much to do if we are to unleash a new form of capital and create a new asset class. The G8 on 6 June offers the first real opportunity to draw together the governments of the major developed countries around this agenda and to create an action plan to grow this market. It must not be wasted.

Author: Nick O’Donohoe is the Chief Executive Officer of Big Society Capital in the United Kingdom and Vice-Chair of the Global Agenda Council on Social Innovation.

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