Better Society Capital, the investment entity utilizing funds from dormant bank accounts to address significant social issues in the UK, has successfully surpassed the £1 billion investment milestone.

Established in 2011 as Big Society Capital, it originated with £400 million from dormant accounts and an additional £200 million from four major high street banks. To date, the fund has invested in 3,750 charities and social enterprises, generating enough returns to reinvest into newer and larger social impact initiatives.

This organization partners with private sector and philanthropic investors, managing to attract nearly £3 billion in further funding for projects concentrated on homelessness, youth support, and health care initiatives.

Unlike conventional public funding models, social impact investors assume the financial risk by investing in projects that aim to achieve predefined outcomes, receiving returns only upon fulfillment of these targets. Since its inception, Better Society Capital estimates that the impact investing market has expanded from approximately £800 million to £10 billion.

Chief Executive Stephen Muers remarked, “Reaching the billion mark demonstrates the efficacy of capital recycling and sustainability. It’s a testament to our model, and it reflects the overall growth of the market as more investors recognize the potential for social impact alongside financial gains.”

He emphasized the progress in housing provisions for individuals at risk of homelessness, pointing to Resonance, a social impact investor managing £325 million in assets, which is currently housing 3,600 individuals through various projects in Greater Manchester, Merseyside, Bristol, and Oxford.

Muers noted, “The number of individuals facing precarious housing situations continues to rise, with recent figures indicating around 100,000 families. We began investing in this area back in 2014, targeting funds to purchase properties and lease them to charities to provide stable homes.”

“In the past year, our initiatives have reached significant scales. Local government pension plans and charitable endowments are beginning to invest, and our model has successfully provided housing for thousands across the nation.”

“Despite our progress, we have not yet adequately addressed the challenge, as there remain 100,000 families in temporary housing. However, our growth started from small beginnings, and we have now attracted larger investors, such as pension funds, to participate.”

Better Society Capital aims for a 1 percent net annual return on its deployed capital, averaged over five years, and a 3 percent return from its investment portfolio to offset operational costs. Even though inflation is diminishing its capital, BSC believes that their approach demonstrates the viability of outcome-driven social programs over simple state funding.

There have been no additional funds received from dormant bank accounts, insurance, or pension policies in the past year. The previous government had projected an allocation of £350 million by 2028 for organizations like BSC.

The Labour government has indicated its intention to explore alternative methods of delivering social services by “rewiring the state” and has established a social impact investment advisory group to guide the Treasury in effectively directing funds for outcome-based initiatives. A decision is anticipated with the second phase of the Chancellor’s spending review, expected to be released in “late spring.”

Muers shared, “The government acknowledges that social impact investing can support its objectives. There is substantial potential to engage investors focused on issues that are significant to the government, fostering effective collaboration.”

He advocated for funding specifically aimed at supporting disadvantaged youth and families, particularly where complex challenges arise that traditional public services may not adequately address. He stated, “We have encountered successful investment-backed models that effectively deliver these crucial services.”