Big Society Capital

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Big Society Capital Limited (BSC) is a UK social financial institution set up by the UK Government in 2011 to help finance projects under the banner of the Big Society. BSC was the world's first ever social investment institution of its kind, established by the Cabinet Office and launched as an independent organisation with a £600m investment fund in April 2012.[1] BSC is a subsidiary of the Big Society Trust, as is its sister organisation the Big Society Foundation. The three organisations together make up the Big Society Capital group which was originally known as the Big Society Bank (BSB), although it is not technically a bank.[2]

BSC's aim is to grow the social investment market. It invests in bodies that provide finance and other support to social sector organisations – making it easier for social entrepreneurs to access the capital they need, and become sustainable. BSC was set up with £600 million in capital to invest: £400 million from England’s share of unclaimed assets and £200 million invested by four large retail banks. The organisation's rules are subject to the Dormant Bank and Building Society Accounts Act 2008.[2]

First year of operations[edit]

One year into operation, BSC’s first annual report was published in May 2013 and is available for download on the Big Society Capital website. The report notes that over £56 million in investment was committed to social finance intermediaries, which resulted in the funding of a range of social sector organisations. [3]

Unlike grants, social investment is given to social enterprises on the basis of both social and financial returns; as a result, longer-term finance streams are created. Over time, BSC is expected to leverage its capital at least three times over and significantly increase the amount of finance available to the social sector.

Big Society Bank[edit]

The government policy concept for the bank was known as the Big Society Bank (BSB).[3] Launched by Prime Minister David Cameron in July 2010 the BSB was expected to begin operations in Q3 2011.[4][5] Minister for the Cabinet Office Francis Maude claimed that the BSB would instrumental in creating new financial products such as social impact bonds and said that "it will be easier for social enterprises to fund themselves so they have cash flow".[6] Its initial capital was to be provided from money from dormant UK bank accounts, with a further £200M from UK banks. The government also planned to encourage some of the £95bn of charitable assets to be invested in the bank.[7]

Mission[edit]

The Bank's mission is "to catalyse the growth of a sustainable social investment market, making it easier for social ventures to access the finance and advice they need – at all stages of their development.".[8] It is independent from Government and acts as a wholesaler, not investing directly in projects but intended to "invest in products developed by intermediaries and encourage others to do likewise"[8]

Reactions[edit]

The principle of the Big Society Bank has met with criticism from diverse groups including banks and charities. Giving evidence to the Public Administration Select Committee, Thomas Hughes-Hallett, chief executive of the Marie Curie Cancer Care said: "it is potentially setting up a system to encourage vulnerable charities to borrow money."[9] In January 2011 Banco Santander who have major retail banking interests in the UK, withdrew from Project Merlin negotiations with the Government and is expected not to make any direct payments to the BSB.[10]

The FT suggested that it was "a tiny acorn from which it is far from certain that a giant oak will grow. But there are some very exciting ideas ...which could help society and government tackle issues that have always struggled to obtain funding in the past"[11]

Management Today said that "There's nothing wrong with the idea, or the model, or even the pot. But this plan still seems to lack some hard-headed commercial nous".[12]

Associated organisations[edit]

The Big Society Trust is the holding company, and The Big Society Foundation is for charitable donations.[3]

See also[edit]

References[edit]

External links[edit]