The Prime Minister, David Cameron, has today launched the Big Society Bank, which will fund community schemes and social enterprises across the UK.
Big Society Capital, the world’s first such investment institution, will invest via intermediaries in social enterprises, social impact bonds and other businesses that seek to deliver a particular social good, such as helping young people get into work.
The fund has already agreed investments worth £3.6 million in five schemes including the Think Forward Social Impact, Franchising Works and The Community Generation Fund, which supports the development of renewable energy for local communities.
Interestingly, the majority of the money used to fund the Big Society Bank will come from hundreds of millions of pounds currently resting in dormant bank accounts. A total of £400m will come from such accounts, where there has been no customer activity for at least 15 years. This pot will then be topped up by £200m committed by Barclays, Lloyds, HSBC and RBS as part of the so-called Project Merlin.
In a transcript of his speech released ahead of the Bank’s launch, Cameron said: “Just as finance from the City has been essential to help businesses grow and take on the world, so finance from the City is going to be essential to helping tackle our deepest social problems.
“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.”