Launch of renamed Big Society Bank will change world, says Maude

Launch of renamed Big Society Bank will change world, says Maude

News (UK)

Cabinet Office Minister Francis Maude calls today’s launch (Friday July 29th)  of the Big Society 'Bank' a ‘world changing moment’. It will be known as Big Society Capital (BSC) and its first investment from dormant accounts is an in principle award of up to £1m to the Private Equity Foundation that supports disadvantaged young people into employment, education or training.

In announcing details of BSC, that will act as a wholesale funder for socially-orientated financial organisations which will in turn give it to charities, social enterprises and voluntary groups, Maude said: “There are few moments like this when something happens that can really change the world. We’ve all heard about a small charity or social enterprise sweeping away entrenched local social problems. But we have not seen a significant commitment to help social innovations grow and be implemented on the national stage until now. Big Society Capital will undoubtedly change this and unlock the money that charities and social enterprises need to grow when a big opportunity comes along. This government is proud to support this achievement.”

Sir Ronald Cohen will serve as the unpaid, interim chair of Big Society Capital Limited, the operating company of the group, until it is fully operational and appoints a permanent chair. Nick O’Donohoe, formerly Global Head of Research at JP Morgan, will take the helm as Big Society Capital’s first CEO.

Sir Ronald said the launch marks “the culmination of 10 years’ thought and effort by many individuals and organisations. It is the first of a new kind of organisation devoted to providing finance in the interest of society. The depth and  breadth of The Big Society Trust and Big Society Capital boards, combined with an anticipated £600m in initial funding will enable BSC to attract additional capital to the social sector from charitable foundations, institutional investors, companies and private individuals.

Innovations such as social impact bonds and a burgeoning array of organisations operating across the social sector suggest that we are on the cusp of a revolution. The social sector now has the prospect of attracting funding in the UK to support social entrepreneurs, much as venture capital and private equity did to support business some three decades ago. We very much welcome the equity investment by the Merlin banks and a strategic relationship with them in developing the market for social investment in Britain."

A just published report Investor Perspectives on Social Enterprise Financing, written by the social enterprise consultancy ClearlySo and funded by City Corporation and City Bridge Trust, says it sees the Big Society ‘bank’ as having the potential to be “a game-changer” in overcoming some of the bigger issues that dog the development of the market.

It is likely to have the funding, expertise and weight required to champion the cause of social investment and to bring the City and its institutions more fully into play,” it says.

An experienced board will support Cohen and O’Donohue at BSC, and comprises:

  • Dawn Austwick (Esmee Fairbairn Foundation)
  • David Carrington (Independent Consultant)
  • John Kingston (Association of Charitable Foundations)
  • Geoff Mulgan (National Endowment for Science Technology and the Arts)
  • Dai Powell (HCT Group)
  • Lady Susan Rice (Lloyds Banking Group)
  • Danielle Walker Palmour (Friends Provident Foundation)

The Board of the Big Society Trust, responsible for ensuring the group ‘stays true to mission’, has also been appointed. Members represent a wide spread of leaders in the social and financial sectors:

  • Sir Richard Lambert (University of Warwick)
  • Ian Davis (formerly McKinsey & Co)
  • Baroness Pitkeathley (House of Lords)
  • David Robinson (Community Links)
  • Sir Stephen Bubb (CEO of ACEVO) [ex officio in rotation every three years with NCVO]
  • Peter Holbrook (CEO of Social Enterprise Coalition) ex officio
  • Gareth Davies (Cabinet Office)ex officio
  • Sir Ronald Cohen (Chair of BSC)ex officio

Big Society Capital will be run independently from government with decisions around funding being made by an impartial investment committee.

An interim investment committee set up by the Big Lottery Fund to make some initial investments until the committee is formally established was previously named as:

  • John Kingston (Association of Charitable Foundations)
  • Anna Southall (Big Lottery Fund)
  • Nat Sloane (Chair of Big Lottery Fund’s England Committee, or his nominee)
  • Dawn Austwick, (Chief Executive of Esmée Fairbairn Foundation)
  • Sir Ronald Cohen
  • Nick O’Donohoe 

The four Merlin banks have now also agreed terms for a £200m investment in BSC which will be added to the £400m from dormant accounts.

In a joint statement the four banks' heads, Douglas Flint (Group Chairman, HSBC Holdings plc), Stephen Hester (Group Chief Executive, The Royal Bank of Scotland Group), Antonio Horta-Osorio (Group Chief Executive, Lloyds Banking Group plc), and Bob Diamond, Chief Executive, Barclays plc said: “We are delighted to support the Government’s efforts to transform the UK social finance market and are investing £200 million collectively to launch Big Society Capital as part of that. This is a ground breaking initiative with the potential to be the catalyst for creating a sustainable social finance model in the UK. This investment evidences our commitment to working with the team at Big Society Capital to make their vision of a sustainable social finance market a reality.”

This launch is just one of the many efforts that government is leading to build the UK’s social investment market in support of the Big Society. Earlier in the week it announced a £10m fund to create more investment-ready organisations and before that a £30m fund to build front line organisations.

The government is expected to announce more news on ‘innovative products’ such as Social Impact Bonds, in the next few weeks.

Philanthropy UK’s latest magazine focuses on social investment for philanthropists – read more here.

  • Big Society
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