DAVID Cameron yesterday announced the launch of a “Big Society bank” that will lend money to charities and other good causes.
The fund expects to raise £600m in capital over the next four years, which it plans to lend to social enterprises that can prove they can repay the investment from their income.
Around £400m of capital will come from unclaimed cash left dormant in bank accounts for over 15 years while a further £200m will come from the UK’s four largest high street banks Barclays, Lloyds, HSBC and RBS.
The institution, which will initially be called Big Society Capital, aims to enable successful social enterprises to access funding needed to expand their organisation.
“What is happening here is really important. For years the City has been associated with providing capital to help business expand. Today this is about supplying capital to help society to expand,” said the Prime Minister.
“Big Society Capital is going to encourage charities and social enterprises to prove their business models – and then replicate them. Once they’ve proved that success in one area they’ll be able – just as a business can – to seek investment for expansion into the wider region and into the country.”
Under the scheme a local charity that pioneers a successful method of finding work for the long-term unemployed may be able to access capital to expand its mission across the country.
Nick Hurd, the minister for the civil service, said difficulties associated with accessing investment have restrained growth in the third sector: “For many years, charities and social enterprises have been telling government how hard it is to access long term capital. We have listened and have delivered a new institution that will make it easier.”
Despite a mission statement that overlaps directly with the Prime Minister’s recent “Big Society” concept – an attempt to strengthen civil society and reduce dependence on the state – the idea of the fund has been developed over ten years.