Using Place-Based Impact Investing as an approach to attract external investment

Local authorities can unlock many benefits by adopting a Place-Based Impact Investing (PBII) approach, as Laura Bridges, director at 31ten Consulting, and Mark Hall, senior programme manager at the Impact Investing Institute, explain.

As the new government prepares its first budget amid significant public finance shortfalls, the public sector remains under pressure to deliver more with less. This challenge is coupled with a renewed focus on driving local economic growth and the potential for fiscal devolution within local government.

To navigate these pressures, innovative investment approaches are emerging like Place-Based Impact Investing (PBII), helping to attract external investment and shape markets to deliver strategic priorities, place-making, and long-term financial sustainability.

Responding to the market: market failure vs market shaping

Market intervention presents tangible opportunities for the public sector to play a strategic role in the economic development of its communities, although balancing market efficiency with avoiding stifling innovation and competition is key.

Traditionally, public sector interventions have focused on addressing market failures where the private sector fails to meet market demand, such as access to finance for underrepresented groups. Historically, government intervention has involved one-way grants or contract payments without expectations of financial returns, which is increasingly unsustainable.

Instead of responding to failures, a market shaping approach recognises that markets can be intentionally influenced and prioritised to achieve specific social, economic, and environmental goals. This approach allows the public sector to strategically steer investment towards opportunities that align with its strategic priorities, fostering resilient and inclusive economies.

31ten took this targeted approach in supporting Camden Council to tackle inequality and strengthen its communities through preparing a business case for the funding, design and structure of a Community Wealth Fund. The £30m Community Wealth Fund is a social impact investment fund to grow a more inclusive economy in the borough, provide different types of investment to local businesses, organisations and people to develop their ideas and grow their impact in Camden, and support those who have struggled to access finance through existing routes.