Posted on 26th January 2012
A round-up of news from the world of social investment reveals a major step forward for Big Society Capital (formerly Big Society Bank) and further development of the 'payment by results' model.
Big Society Capital plans to be fully operational by April
The European Commission has given the go-ahead for Big Society Capital (BSC) to use £400m of funding from dormant UK bank accounts to support social enterprise and community organisations. The decision, under EU state aid rules, came more quickly than the 18-month expected wait and means BSC plans to be fully operational in April this year.
BSC chief executive Nick O’Donohoe said: “We are very pleased to have been given the green light by the EU Commission far more quickly than we could have hoped. We believe this reflects the general engagement in Brussels around the social investment agenda.”
Now the remaining hurdle is getting approval from the Financial Services Authority in the UK.
Once this is achieved, BSC will act as a wholesaler by investing in social investment finance intermediaries, which will provide funding for social enterprise and community organisations. The £400m from dormant bank accounts will be supplemented by £200m from the UK’s four biggest banks, known as the Merlin Banks.
At the moment, BSC is providing funding through an interim committee of the Big Lottery Fund. So far it has made investments worth £3.1m in four organisations. These include the world’s first Social Stock Exchange, which will use its £850,000 funding to improve access to capital for social entrepreneurs.
The other organisations include FranchisingWorks, which will be awarded £1m to help long-term unemployed people to set up their own franchise business. Triodos Bank will receive £500,000 to set up a new payment by results initiative to improve educational, training and work outcomes for vulnerable people in Merseyside. Community Generation Fund will use its £750,000 investment to set up an initiative to create community owned social enterprises.
The Investment Committee will meet again in February to decide on further investments. It is envisaged this will be the last meeting before BSC becomes fully operational.
To read more click on following link:
Social impact investing: Summer 2011
Department for Work and Pensions to use social impact bond model
The Department for Work and Pensions (DWP) has awarded contracts to organisations based on the social impact model to attract investors. If the organisations running projects to help young people make a measurable difference to their lives, the investors will see a financial return. The DWP will pay investors through its £30m Innovation Fund.
The Innovation Fund is a newly launched DWP initiative aimed at encouraging social service delivery organisations, financial intermediaries and private sector investors to work together to design and finance programmes which can help improve employment outcomes for the most vulnerable young people in society. The DWP acts as main contractor and guarantor of a payment by results contract. Unlike typical social service delivery, the funding is provided at risk by private sector social investors, who only achieve a financial return if pre-agreed educational, training and employment outcomes are met.
One such contract has been awarded to Triodos Bank and the Greater Merseyside Connexions Partnership to run a £4.5m scheme to help unemployed young people in Merseyside.
The measurable outcomes include young people remaining in work for three months or completing a course of education.
Triodos Head of Corporate Finance Dan Hird said: “There is a genuine opportunity now for social impact bonds to become more widely used financial instruments in addressing social problems at a meaningful scale".
Bank launches social investment fund
The Co-operative Bank hopes to raise £32m through a new social investment fund to provide low cost finance to co-operative businesses in developing countries.
The Global Development Co-operative (GDC) already has backing from businesses in the UK, US, China, France and India and is now attempting to attract support from global investors and foundations with an interest in international development and impact investments.
The launch coincides with the United Nations’ 2012 International Year of Co-operatives, which aims to recognise the role the business model has played in improving social and economic development in communities across the world.
GDC fund manager Stuart Coe says: “We believe this new concept will be of interest to investors looking to support social or impact investments.”
Community finance association delivers new plan for sector
The Community Development Finance Association is launching its manifesto at its first annual CDFA Innovation Awards on 31 January. Just Finance calls for:
· Access to finance for businesses
· Fair and affordable finance for families
· Growing the social investment market and supporting social enterprises
· A more just financing system
The LankellyChase Foundation has supported the development of the manifesto, which outlines how community finance can grow to offer government and banks a solution to provide access to credit for more SMEs, social enterprises and individuals.
The awards evening, sponsored by Barclays, will showcase community development finance initiatives, rewarding excellence in new technology, marketing, community outreach, new markets and partnerships.
Private sector scheme could generate £1bn a year
A scheme to encourage companies to subsidise volunteering by their employees could boost donations to charities by up to £1bn a year, according to the think tank, Centre for Social Justice (CSJ).
The CSJ proposals have been drawn up in conjunction with C, a new social enterprise group to support the Big Society campaign. The proposal includes an incentive for companies to run C-Volunteering schemes. Companies would benefit froma tax relief similar to the one which exists for research and development. Under the scheme, employees would be encouraged to give up some of their working time to a charity of their choice. The company would agree an hourly rate for the voluntary work and pay that to the charity. However, the company would be able to recoup some of this cost by setting their gifts against corporation tax.
To download a copy of the proposals click on following link:
Centre for Social Justice
