Bang for the buck

Social investment is very much in vogue. In this age of spending cuts and rising demand for services, it is emerging as a source of finance with the potential to address many of society’s deep-rooted problems.

But a number of studies caution that it is also the subject of much confusion; and many children’s sector organisations, whose purpose is to improve young lives, have precious little time or resource to get to grips with complex trends in the financial world.

So what, exactly, is social investment? Lighting the Touchpaper, a report by Boston Consulting Group and the Young Foundation, defines it as "the provision and use of finance to generate social and financial returns. It can be the provision of loans or direct equity investment". Crucially, investors expect not only to recoup their financial outlay, but also to achieve a "social return" – such as through a programme of support demonstrably improving outcomes for young people at risk of offending. And social investment has to be repaid by the recipient; it is no substitute for grant funding or charitable donations and should never be regarded as such.