Can social capital convince investors?

The fund, which exclusively invests in funds that have a social investment mandate, provided some £37m for three fund managers with a social impact angle.

BSC committed £10m to Impact Ventures UK, a fund soon to be launched and managed by LGT Venture Philanthropy in association with Berenberg Bank, providing growth capital to social enterprises in the UK.

Another £10m went to Results Fund, a vehicle designed to provide finance for social sector organisations competing for government payment by results contracts. Other BSC investments include an £8m commitment to Nesta Impact Investment Fund, which provides early-stage capital notably targeted towards the area of learning and employability of children and young people.

At the same time, the City of London Corporation committed a further £20m of cash for social investment, focusing on two funds.

The Contract Readiness Fund, run by the SIB Group, received £10m and will look to invest in social ventures looking to build their capacity in order to bid for government contracts.

A further £10m was provided for incubator projects to be managed by the Big Lottery Fund, focusing on investments in early-stage social enterprises.

Social impact investing is a growing theme in public and private circles, and seeks to generate not just a financial return for investors but a broader social benefit for society as a whole. Cameron put the idea of the "Big Society" at the heart of his 2010 election campaign and social impact investing would seem to be a key part of that.

BSC is hoping to make around £50m worth of investments by the end of this year, though this will barely make a dent in its huge £600m fund.

However, there are question marks over the extent to which non-state investors will support concepts such as social impact investing. Given the potentially high risks involved in such investments, along with an expectation that at least some of the upside will be in "social benefits" rather than cash, it is hard to see how many traditional investors will be able to hold this sort of commitment on their balance sheets.

Social impact investment may lie largely in the realms of philanthropy and funds like BSC, itself created using money in dormant bank accounts that was otherwise unused, may be one of the only sources of significant commitments that social impact investment funds will be able to rely upon in their fundraising efforts.

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