2011 was, on the surface of things, a big year for social investment, or impact investment, as it has now been rebranded. But there are some good reasons to believe that 2012 will be the year when impact investing really begins to have an impact.
To start with, 2012 will be the year when Big Society Capital formally opens for business. The Big Society Bank (BSC) project has been through many iterations, and in 2011 several rounds of pilot investments were made including those from Nesta's Big Society Finance Fund, and Big Lottery Fund's Big Society Investment Fund. But in 2012 BSC will bring a scale of capital to the UK impact investment market not previously seen, and with some demanding goals around impact and leverage of additional funds. As a result, the impact investment industry will step up a gear in 2012.
But 2012 will also be the year when our focus will move from finding the money for impact investing, to measuring the impact that money is making.
In the past, one couldn't help getting a sense that this was a field differentiating itself by its focus on impact, yet often doing little more than asking 'Does this organisation do good work?' before moving on to worrying about the financial returns that might be achieved. In 2012, the practice of measuring the impact of impact investments will rapidly advance through the initiatives like the Inspiring Impact programme, Nesta's Alliance for Useful Evidence and international programmes like Impact Reporting and Investment Standards.
In 2011, there was a dangerous trend for commentators on impact investing to narrow their discussions to Social Impact Bonds alone, despite there being only one live example and a rich set of other impact investment examples to discuss.
But in 2012, we will see the launch of five to eight further Social Impact Bond pilots, including those tackling the issue of young people not in education, employment or training via the DWP's Innovation Fund, and those tackling the issues of multiple problem families in four local authorities working with the Cabinet Office. There are more SIBs in the development pipeline, including strong interest in our Creative Councils programme, and investors likePanahpur are starting to think hard, and highly creatively about how capital can be attracted to these potentially very high impact, but risky opportunities.
My final prediction for 2012, is that impact investments will become a standard part of individual investors' portfolios.
This year, Nesta's report Investing for the Good of Society showed that there is a significant segment of investors who find impact investments an attractive proposition. But in 2012, we will see a new range of brokers and distribution platforms bringing real impact investment products to the real people who want to see their money make an impact. These pioneers will include organisations like Abundance, who enable individuals to invest in renewable energy projects, and Worthstone, whose work is putting impact investment products into the product range of independent financial advisors.
There's much to be excited about and inspired by in impact investing next year. So here's to an impactful 2012.