Holger Westphely tells Impact Investor that social enterprises should be supported in taking a longer-term view of their operations to make the sector more efficient.
When the UK’s Big Issue Invest was founded 20 years ago, its new managing director Holger Westphely was making the switch from a career in conventional investment banking at Schroders, to the social sector. His experience since then in social investing and consultancy has provided a valuable grounding for the task of steering the organisation through a new era of scaled up investment.
The social investment arm of the Big Issue Group says in its just-published latest impact report that its annual investment in social enterprises and non-profits more than tripled to £9.4m (€10.83m) of funding for 50 UK organisations in its 2024/25 year, compared to £2.7m for 13 organisations the previous year.
This growth has cemented Big Issue Invest’s position as one of the UK’s leading investors in supporting smaller-scale organisations, with 139 social businesses and charities currently held in its portfolio. In May 2025, it reached a cumulative £100m of investments since it started operating in 2005.
The investor provides finance for social-purpose organisations delivering long-term solutions to the root causes of poverty in the UK, with investment ranging from £20,000 to £4m.
Social Impact Debt Fund IV, the organisation’s latest fund, launched two years ago, made its first deployment earlier this year. That was a £3.2m investment enabling Great Oaks College, a specialist educational facility for young adults with learning difficulties, to buy and refurbish new premises, after it was given notice to vacate its existing site in London.
Like this example, Big Issue Invest’s larger-scale investments tend to be property-focused, helping organisations such as hospices, care homes and specialised schools to acquire buildings at affordable rates or providing support for affordable home developers.
However, around half of investments that it makes are much smaller, typically in the £30,000 to £300,000 range. For these types of investments, the organisation is “agnostic” in terms of what causes it will invest in, so long as its support will produce demonstrable social impact, Westphely says.
One recent smaller scale example is a £98,000 financing, comprising 80% loan and 20% grants, from its Impact Loans England Fund to support the sexual health charity Brook in repurposing an existing site in Cornwall, southwest England to add a mental health and wellbeing hub for young people.
Another is £180,000 of investment and a £20,000 grant in 2025 for Circomedia, a contemporary circus and physical theatre school based in Bristol, southwest England. The funding is intended to safeguard and grow social impact at the school, whose activities include an outreach programme for local young people.
“As long as you’re making above a certain level of social impact, which we assess right at the start, we don’t really mind what that impact is. You could be helping excluded teenagers to get into employment or education, providing shelter for homeless people or helping people overcome addiction,” Westphely tells Impact Investor.
Long-term thinking
Westphely managed the social investment portfolio at CAF Venturesome and co-founded social sector financial consultancy Eastside People, before joining Big Issue Invest as head of lending in 2022. He took on the lead role last month, following the departure of CEO Danyal Sattar in early 2025. Now, he hopes to help the organisation build on the scale-up of investment already under way.
“There’s a huge amount of potential to grow the social investing market, not just in market share, but also to grow the wider market and bring it to more organisations by explaining the value of social investment, which is really so much more than just the money,” he says.
In particular, Westphely is keen to help investee charities and other social organisations to move from a short-term, single project-based funding cycle typical of the sector to run more like businesses.
He says there is an inherent inefficiency in raising money for a project with a short timeframe of, say, three years, because staff frequently start leaving as the project nears its end due to worries over job security. The resulting loss of vital knowledge and infrastructure means that the enterprise is effectively starting from scratch for any follow-on project, with the higher costs that entails.
“If you can frontload investment to set up a social enterprise that can build infrastructure and knowledge over time, the amount needed for future funding becomes smaller and you can become more efficient. I think this is a key part of transitioning into a more efficient, more nimble, more business-like social sector,” he says.
In terms of investment products used by Big Issue Invest, unsecured flexible loans have proved highly effective for many investments, being simple to understand, while remaining structurally robust over a period of years.
By contrast, more complex structures such as equity, quasi-equity, or outcomes-based contracts, may be suitable for specific situations, but may not be easy to implement as intended for small social enterprises, according to Westphely.
“We do have experience with many of these other structures, but they tend to be more appropriate for more sophisticated borrowers,” he says.
Dormant assets boost
Social investors such as Big Issue Invest rely to an extent on local and national government initiatives aimed at alleviating social pressures to provide investment opportunities.
To that end, the UK’s dormant asset scheme, which taps unclaimed funds in dormant bank accounts to invest in social causes, has been an important catalyst for activity in the sector.
The government announced a fresh £440m tranche of funding from the scheme in June, of which £87.5m is earmarked for social investment initiatives – a smaller figure than some in the sector had hoped for, but still very useful to organisations such as Big Issue Invest.
“This new pot of money coming up for distribution will help shape what we do in the social investment sector. We would look to use it as a cornerstone to draw in other investors and build up a much larger fund that we can deploy through our own channels,” Westphely says.
