The Problem

The Social Impact Investors Group and Big Society Capital recently came together in 2017 to commission a rapid survey on diversity and equality. 

The Diversity Survey received 233 responses, providing a substantial sample size which confirmed a glaring disconnect in the socio-economic backgrounds of social investors making decisions, individuals running social services, and individuals seeking funding for their organisations.

A summary of the results can be found here.

Key Findings

52% of individuals in investment management are women, indicating a fair balance in these roles.

However, only 28% of women are represented in leadership teams of social investment firms.

This trend is exacerbated in the wider financial services sector, with only 14%of women represented in executive boards.

(Oliver Wyman, Women in Financial Services, 2016)

The survey found that women representation is generally balanced in back-office roles and investment management roles, but this representation distinctly falls at the point of decision-making. For Black, Asian and Minority Ethnic (BAME) individuals, it was found that BAME individuals seldom progress beyond back-office roles.


The implications of these findings can be summarised into two levels:

First, we may not be recruiting or retaining the ‘best’ people for the work that we do. 

Second, these findings suggest the existence of unconscious biases which can influence how finance is allocated.

There is better evidence for the former, while the latter is a big concern for the industry.


The Current situation


In-house research conducted by The Social Investment Consultancy contributed to the above findings, noting a distinct lack of gender diversity amongst individuals charged with making investment decisions in Social Investment firms.

Key Findings:

  • In 11 of the 12 social investment firms surveyed in summer 2016, women made up less than 50% of those charged with making investment decisions. In 10 of these firms, the representation of women is less than 25%.

  • Recent figures indicate that women make up 46% of the UK workforce (The World Bank, 2016), and within the social services sector, this figure increases to 80%. This large gender gap indicates a lack of synergy between the gender profile of those making investment decisions, and those who are likely to be beneficiaries of these investments.

    • According to the 2011 Census, 16.65% of the UK population is from a Black and Minority Ethnic group (BME). In London this figure increases drastically to 41.5%.

    • Considering the majority of firms surveyed (10 of 12) are based in London, a figure of 25% was deemed to be a reasonable, and indeed conservative, measure of a suitable proportion of BME decision makers within Social Investment firms.

    • It was found that this measure was not met within Social Investment firms, and indeed that in 83% of firms, less than 25% of decision makers were from a BME background.

    • No firm reported having more than 50% of their decision makers as being from a BME background.

    • 2 interviewees spoke to a clear cognitive bias of investors towards those with a background similar to their own, with decisions based on the quality of presentations often over the quality of service outcome, echoing the discussion about class bias highlighted earlier in this report.


There is a strong moral as well as business case to improve investor diversity. Despite these grim statistics, the intriguing insight arises from social investors' awareness of their own sector’s lack of diversity, which provides a strong platform from which progress can be achieved, and if the hypothesised causal link between diversity and innovation is correct, to spur the latter.


Who Will Benefit?


There is both intrinsic and instrumental value inherent in promoting investor diversity within social investment. To help the UK achieve our common vision of a “bigger, stronger society” as stated in the 2011 government strategy on social investment, we need to ensure that our sector is also grounded in principles of inclusion, representation and justice.

We believe that improving the diversity and inclusion of social investment will benefit three main groups – VCSE organisations, individuals working in the social investment space, and the funds and investors themselves.


1. VCSE Organisations

VCSEs may are currently underserved by social investment for a myriad of reasons, including unconscious biases and a sense of exclusivity of who social investment is there to serve.

For example, social enterprises in the North East have complained of a class bias, which deters southern-based intermediaries and investors from working with organisations whose context and impact they don’t understand.

Increasing the diversity of the people working in social investment should broaden its appeal and counter the sense of 'them vs. us'.


2. Individuals in Social Investment

People working in social investment, particularly those with protected characteristics can benefit from investor diversity.

Educating organisations of their obligations under the Equality Act and offering support with their recruitment, retention and promotion practices will reduce the instances of discrimination faced by those in the sector. It will also reduce the likelihood of people, particularly with protected characteristics, being deterred from applying or being unaware of the opportunities to work in this sector.

Increasing the diversity of the workforce as a whole will also reduce the exclusion and outsider-ness that can be experienced when there is only minority representation.


3. Investors & Impact Funds

A more inclusive sector will increase the pipeline of investible organisations, better enabling investors to deploy their capital. It is widely acknowledged and proven that “gender diversity in business increases diversity of thought, which leads to better decision” (Economist, September 30th, 2017).

It therefore follows that increasing the diversity of the people who work in social investment, particularly those at investment committee and board level, will lead to better decision making and ultimately investments and investment returns for the funds that employ them. This in turn should lead to improved social impact, and results for the VCSE and beneficiaries that the funds serve.