Growing the impact economy

A defining moment for the impact ecosystem

Across philanthropy, business, government and civil society, we are seeing:

• growing interest from wealth holders and institutions

See: How are Modern Philanthropists making a difference? Wealth advice and philanthropy: The benefit to charities and advice firms

• new policy attention and infrastructure

See: Local communities set to benefit as new Office for the Impact Economy to partner with philanthropists, social investors and businesses Our place to give: a plan for growing place-based philanthropy

• more organisations intentionally designing for impact

See: Purpose-led businesses thriving and outperforming UK peers, new data shows Third Sector Impact Report compares how 33 of the UK’s leading charities measure, report and share their impact.

Why this matters

Seeing the impact economy as a connected whole changes what becomes possible.

It helps:

• organisations understand where they sit and how they can grow
• funders and investors direct capital more effectively
• policymakers recognise and support the sector
• more people see a role for themselves in creating impact

Building the evidence base through Impact UK

Our Impact UK work helped establish the scale and significance of the UK’s impact economy. It estimated the impact economy at £428bn in gross value added, equivalent to around 15% of UK GDP.

This report showed that the impact economy is not a marginal part of the UK economy. It is a major source of social, environmental and economic value, and a vital part of how the UK can respond to complex challenges, from inequality and health to climate and community resilience.

But understanding the size of the impact economy is only the first step. To grow it, we also need to understand what different parts of the impact economy need to thrive.

Understanding the impact economy

NPC and Social Investment Business have launched Segmenting the impact economy: A framework for directing finance effectively.

The framework builds on Impact UK by looking more closely at the different types of organisations that make up the impact economy, and the different forms of finance, subsidy, policy and infrastructure they need to grow well.

A foodbank, a charity with a trading arm, a co-operative, a credit union, a B Corp and a commercial business may all create social or environmental value. But they do not need the same kind of support.

The framework is designed to help policymakers, funders, investors and sector leaders make better decisions by matching different types of capital and support to different organisational realities. This includes grant, revenue subsidy, blended finance, impact investment, catalytic capital, member-benefit finance, commercial investment and market-shaping policy.

Convening leaders through The Beacon Forum

Alongside our research and frameworks, NPC is working with partners to convene the people and organisations who can help grow the impact economy in practice.

Through our work with The Beacon Forum, we are helping bring together leaders from philanthropy, social investment, business, government and civil society to explore how more capital, influence and infrastructure can be directed towards lasting social and environmental outcomes.

This convening work is central to our wider ambition: moving from a better understanding of the impact economy to practical collaboration that helps it grow.