The ethical questions around charities’ use of social investment posed by Martin Brookes (‘Should there be limits to the realm of markets?’) are no doubt questions that many in the sector share. Certainly, in my experience, they are very real for charities that have accessed social investment, and that have had to weigh up the pros and cons, including the potential impact on donations and the nature of donor relationships.

But their overriding consideration has been whether accessing investment will mean that they can deliver more positive outcomes for the people they support. While the examples of real experience are still limited, anecdotally the experience of UK charities has been positive.

Action for Children has received social investment (via social impact bonds) to fund children’s services in Essex and Manchester that wouldn’t have existed otherwise. The charity was motivated by the ability to reach more children and was impressed by the commitment of investors to achieve the same ends, rather than seeking a financial return as the main motive.

Mencap’s charitable subsidiary Golden Lanes Housing has now been involved in a number of bond issues to fund homes for people with learning disabilities. They have successfully brought in mainstream institutional investors, raised the profile of the charity, and offered an opportunity for existing donors to increase their support, with no evidence of investment displacing donations.

Disability charity Scope has accessed social investment in different forms, including through their 2012 £2 million bond issue, which I was involved in as CFO. Investors treated their giving and investment activities separately, with no apparent ‘cannibalization’ of donations. Social investment also brought new supporters to Scope who wouldn’t have otherwise donated, and who have subsequently become engaged in Scope’s cause.

As the market grows, more detailed analysis on the impact of social investment on giving trends will be needed both to address the social sector’s concerns and to monitor risk. It will also be increasingly important that charities are able to articulate and demonstrate their social impact, to ensure that financial considerations do not ‘edge out social ones’.

I welcome the debate on these issues, and hope to see the perspective of charities and social enterprises playing a bigger role in shaping the future of the social investment market.

Geetha Rabindrakumar

Head of social sector engagement, Big Society Capital