Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
6.60 The academic literature is not very prolific in terms of studies analysing and mapping investors
and intermediaries. While some papers go into detail on a specific market component (e.g. Mendel and
Barbosa, 2013 overview existing exchange platforms), others focus on case studies of specific instruments
(e.g. Alcock et al., 2012 evaluate the impact of the SEIF in the UK). Therefore, the mapping of SII is
always very incomplete. Recent research initiatives such as the CASE i3, described before in Box 6.5, are
aiming at providing robust evidence on the SII market as a whole.
6.5.2. Industry reports
6.61 While there are few academic papers, an increasing number of industry reports have attempted to
size the SII market. These reports look at the market from different angles and often use different
definitions that may include different things. Many of these reports focus on certain countries, geographies
or sectors providing a window into parts of the SII market but a fragmented and sometimes contradictory
view on the overall market. Without a comprehensive picture — either in terms of market potential,
effective demand\supply or actual transactions —, data collection efforts can result in significant biases.
6.62 A number of these reports build on the same few data sources and on limited evidence from case
studies (and many of the same cases are used repeatedly). To date, most SII data obtained comes from
surveys (e.g. Saltuk et al, 2011, 2013, 2014) and interviews that have been conducted by SII
intermediaries, government agencies and/or consulting firms. Even though the information collected in
these reports is a big step forward towards a better understanding of SII, sample sizes are often limited and
estimates of the SII market often require strong assumptions.
6.63 A number of industry reports have provided some estimates on the actual (or potential) size of the
SII market. Table 6.5 below provides examples of SII market estimates as well as a brief explanation of the
approached followed. Few reports focus on actual transactions, rather measuring effective demand and
(quite often) estimating the market potential and forecasting future market growth. These numbers should
be regarded with caution since they rely on rather strong assumptions and the underlying market estimation
effort entails a non-negligible number of challenges. The estimates presented in the table are just
illustrative since the underlying data and methodologies are very different due to data availability in each
country. Therefore, any comparison of estimates across reports should be avoided.
6.64 The strategies to collect data previously described can broadly be found in the existing industry
estimates of the SII market. As an example, Weber and Scheck (2012) take a bottom-up approach to size
the German SII market, by compiling information on a number of major SII investors. Specifically, they
sum up the assets, investments and funding from BonVenture, the Social Venture Fund, Auridis gGmbH
and the KfW funding. Therefore the estimates might be downward biased since not all SII players are
included due to data collection challenges.
6.65 As discussed before, estimating the actual size of the market requires a different approach, as
well as different data and respective sources. The strategy followed by Brown and Swersky (2012) to
forecast future SII investment demand was the following. First, a number of key SII sectors were identified
and further disaggregated into 26 subsectors. Second, the share of economic activity performed by social
organisations was calculated for each subsector. Third, the capital requirements of social organisations
were calculated by sector. Finally, by comparing present with future capital requirement (based on sector
growth and capital depreciation assumptions), it is possible to calculate the investment needs and thus
forecast future SII demand. The underlying raw data is obtained through a combination of a survey to
40 SII market players, interviews and publicly available data sources, in a mixed bottom-up (sector level)
and survey approach.
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