Impact UK: Why we need the impact economy

We often talk about the economy as if it were separate from society—a machine to be managed rather than a system of human choices. The truth is that they are entirely interlinked. We need to move beyond that binary, and the impact economy shows how. Across the UK, hundreds of thousands of organisations are showing that enterprise and investment can be directed towards public good in resilient, sustainable, and effective ways. Yet in the UK, a few enduring myths risk holding us back.

The first is that government can and should go it alone. No one says it outright, but you rarely see headlines that read ‘Employers must cut child poverty’ or ‘Communities need to tackle climate change’. The reflex is always ‘Government must act’. For much of the past century, we’ve treated social and economic progress as a matter for the state, with business and civil society playing supporting roles. But the challenges we face are too complex and interconnected for one sector to solve in isolation.

A second myth is that impact is somehow niche. In truth, it’s already woven through our economy. Far from marginal, these firms and funds are among the most innovative parts of our system: creating jobs, revitalising communities, and providing opportunity. Across the UK, we can already see this in action. Businesses like Greggs and COOK, whose co-founder James Perry is spotlighted later in this report, are employing exoffenders and supporting others to do the same. Institutional investors such as Legal & General are investing billions in regeneration across our city regions. And community programmes like Our Future are supporting local climate action.

Purpose-driven businesses, social enterprises, mutuals, B Corps, and trading charities contribute significantly to UK GDP, these contributions are comparable in scale to some of the country’s major sectors, such as manufacturing. Alongside, sits the financial engine of the impact economy: philanthropy, social investment, and institutional impact investment. In the UK, this capital stands at around £100 billion and growing.

Yet a third myth persists: that this will all happen by itself. It won’t. The UK’s strengths of civic participation, deep capital markets and a tradition of social innovation give us enormous potential. But potential is not inevitability. Without leadership and concerted action, we risk losing momentum. A confident society doesn’t sit back and hope for progress; it shapes it through creativity and conviction in what’s possible when people work together. That means government setting clear direction, investors taking a longer view, and philanthropists and entrepreneurs stepping up to solve problems that matter. None of this is easy. That’s why we need a new playbook: to unlock the full capacity of the UK to deliver change. If we can do that, letting go of old myths and recognising the scale of the opportunity, the impact economy can be a foundation for navigating the century ahead.

For philanthropists, this moment offers a particular opportunity, not because philanthropy is always the answer, but because it brings freedom other forms of capital often lack. It can back ideas early, take thoughtful risks, and bring people together across silos that hold progress back. By applying that independence to test new models, support communities, and partner with entrepreneurs and investors, philanthropy can shape the new playbook we need.