A report commissioned by RBS has estimated that banks in the UK have over £3bn invested in outstanding lending to social organisations, and that there is no evidence that banks discriminate against the social sector.

The report The Forest for the Trees: UK banks investment in a social purpose was authored by social research company Social Spider, using real lending data provided by RBS, to challenge the idea that mainstream lenders are reluctant to lend to social sector organisations.

The report states that RBS has around £250m in outstanding lending to the social sector, with nearly £50m in new lending over the year from September 2014 to August 2015. The report then extrapolate this figure across other banks, stating that this would amount to an estimation of over £3bn worth of social sector borrowing from mainstream banks. It estimates that annual figures for new loans would be at over £620m per year.

It compares this figure to the latest available for total deals in the ‘social investment market’ of £427m per year. It says that despite the recent growth of this market, if social sector organisations are taking on repayable finance, they appear at least as likely to get the money from a mainstream bank as they are from a social investor.

It states that there is little, if any, evidence that banks “discriminate against charities or social enterprises on the basis of their organisational type – or that banks are less likely to meet the needs of social organisations than those of mainstream businesses”.

The report states: “In that context there is a danger that the rhetoric around the emergence of the ‘social investment market’ may be having the unintended consequence of making it harder for social organisations to access repayable finance as they may be more likely to dismiss the possibility of approaching mainstream providers who may lend to them.”



The report sets out a number of recommendations for social sector organisations, banks and policymakers and social investment experts. These include that social sector organisations seeking investment should “understand that there are a range of routes to finance – some of which may be labelled ‘social investment’, some of which may not”.

Banks and social sector organisations should “build on their existing efforts to engage with social sector organisations about the relevance of ‘normal’ financial products and services”.

And social investment policymakers and experts need to more clearly “understand and articulate how their services and products are meeting unmet needs of social sector organisations”.

David Floyd of Social Spider, who co-authored the report alongside Dan Gregory, said:  “This report provides social sector organisations, policymakers, social investment experts and banks themselves with a clearer picture of the role of banks in financing the UK’s social economy.  We would like to see other banks publishing their data, and we would like to see banks and social sector organisations do more to engage with each other about the relevance of ‘normal’ financial products and services.

“In addition, social investment policymakers and experts should consider what specific gaps publicly supported social investment is intended to fill in order to avoid replicating, competing with or undercutting mainstream finance with public subsidy.”

The full report is available here.

→ Read the original article by Alice Sharman here