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The Church of England makes first moves in social impact investing through funds

Published: 23 November 2021

One year into the new role of Head of Social Impact Investment of the Church of England Vanessa Morphet discusses her strategy.

Vanessa Morphet, The Church's Head of Social Impact Investment
“An institution with the standing of the Church of England is ideally placed to have a ‘catalytic capital’ effect,” says Vanessa Morphet, The Church’s Head of Social Impact Investment. The organisation’s small initial allocation of £16mn – less than 0.2% of The Church’s total assets – “is just the first step.” The Church of England


  • Head of Social Impact Investment, The Church of England, 2021-present
  • Head of Investment Models, UK Government Inclusive Economy Unit, 2017-20
  • Investment Director, Impetus, 2012-16
  • Business Manager, Wellington, 2007-8
  • Chief Operating officer, Arma Partners, 2005-6
  • Vice President, Goldman Sachs, 1995-2005
  • Oxford University, Politics, Philosophy & Economics, 1992-5
  • University of Cape Town, Commerce & Accounting, 1988-91

Last year, The Church of England set up its first Social Impact Investment Programme. It had previously sought to assess its social impact but had never before incorporated this into a direct investment approach.

This is part of a more general strategy by the Archbishop of Canterbury to focus more on ethical investing. The Church has allocated £16mn (€19mn) to fund the initiative and appointed Vanessa Morphet to head it up in November of last year.

“I saw this as an opportunity to put my policy work into practice,” Morphet tells Impact Investor. “I believe that one of the key needs of this developing area of social impact investment is the requirement to get more capital mobilised. An institution with the standing of the Church of England is ideally placed to have a ‘catalytic capital’ effect.”

When challenged on how small the initial allocation of £16mn (€19mn) is as a proportion of the Church’s enormous assets of £8.9bn (€10.6bn) – that is, less than 0.2% – Morphet is keen to stress that “this is just the first step.” She hopes “more will come in the future once the clear benefits of the programme are demonstrated.”

“Stand up for the world”

Morphet came to the UK as a Rhodes Scholar and decided to stay. She was attracted to the investment banking industry and joined Goldman Sachs working as a Vice President in the mergers and acquisitions team focused on communications, media and technology. “This was a very busy time, and I didn’t get much sleep.”

She says that at an early stage she “became aware of the potential of combining the power of the capital markets and socially focused investment impact.” So, she decided to “think about how I could use my skills to have a high level of social impact.” After all, “the Rhodes Scholarship motto is ‘Stand Up for the World.’”

Morphet took a role in the UK Government’s Inclusive Economy Unit, working closely with Big Society Capital, and came to see the particular needs of the underprivileged in the UK, often neglected in the scramble to help overseas.

Focus on three areas

The Church of England also focuses its social investments exclusively on the UK. “There’s no intention to look at overseas projects at this stage,” says Morphet.

The Church has launched its Social Investment Programme with a focus on three key areas. “Despite the Programme being called ‘Social Impact’, environmental impact will be a major priority,” Morphet says.

The other two areas more easily fit into the social definition. “We are looking at housing needs in the UK and the high cost of credit. Our overriding concern is to achieve better outcomes for local communities,” she notes.

Investments are “required to give a financial return that ensures capital preservation rises with inflation.” Morphet emphasises the catalytic role the Church’s capital provision can have with the imprimatur of its investment and the ways in which she is working alongside other “mission-focused investors to achieve this goal” of being a catalytic investor.

First investment

Earlier this month the Church announced the first allocation of the programme, which gives us a clue as to the direction of policy. It invested £1.6mn (€1.9mn) in the Women in Safe Homes fund (WISH).

This investment will “support the purchase and refurbishment of properties which are then leased to women’s support organisations who in turn, let them at affordable rates to vulnerable women at risk of homelessness.”

Homelessness is a particular problem in the UK. Before Covid, UK homeless charity Shelter estimated 280,000 people were living on the streets, with thousands more at risk. 35% of women who have slept rough, left home to escape violence.

Morphet says that she had read the article in Impact Investor on the WISH fund and that in investigating the fund she realised it “ticked all the boxes.”

Investment criteria

What are those boxes? According to Morphet, the impact programme intends to “back innovative funds and innovative fund managers who are coming up with new investment projects that are addressing marginalised social groups.”

It is committed to investing primarily through funds or fund-like structures. For two reasons, according to Morphet: “Firstly, because in this way we believe we can ‘catalyse’ more mission-aligned capital, and secondly to piggyback on the investment expertise of impact innovators in many different fields.”

Broader UK real estate portfolio

The Church’s first move in the area of social housing needs to be put in the context of much broader changes going on in the organisation’s very significant portfolio of real estate in the UK.

A report commissioned by the Archbishop of Canterbury earlier this year said that the Church should look at rejecting the highest financial bids for land in order to deliver more “genuinely” affordable housing.

A revolutionary concept that looks to overturn the Church’s traditional fiduciary requirements. The first ever ‘Bishop for housing’, Bishop Guli Francis-Dehqani has been appointed to oversee the delivery of some of the report’s recommendations.

Building pipeline

Apparently, the Church has a very good pipeline of impactful projects. “We are continuing to build relationships in the sector and, in particular, to work with many faith-based investment organisations who have similar fiduciary responsibilities,” Morphet says.

She admits to “working very closely with Big Society Capital” and to make sure she is “close to their pipeline and areas of interest.”

That strong pipeline is important. According to a recent report by GIIN on faith-based impact investing, just 11% of participating faith-based investors reported allocating any assets to impact investing, citing a lack of suitable investment opportunities.

Own impact measurements

Morphet says that she very much hopes the £16mn (€19mn) allocation from the Church towards social impact investments is the first of many, but that “obviously that capital must be deployed first, and the impact measured.”

When it comes to measuring impact, Morphet says “the key thing whenever we make an investment is to work with the fund manager. We will then report against our own key impact targets.”

The Church will not use an outside verification process at this stage but will rely on the fund managers. It is also “very much involved in the Impact Measurement Project which provides an existing framework to assess investments across the board.”

Morphet declined to give a timeframe for this deployment and when asked whether investments would be in equal tranches of 10% (i.e., £1.6mn) she observed: “there are no hard and fast rules.”

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