David Cameron’s Big Society speech has caused a bit of a stir. Some say it is the way forward with communities taking control of their own services and having more autonomy – others say it is a cheap way of providing public services. Whatever your point of view the Big Society agenda has the potential for changing everything. Or nothing.
The Big Society Bank – formerly called the Social Investment Wholesale Bank, an initiative of the last government – will be funded with £60m of unclaimed assets. (Prior to the election is was £75m. Where has the other £15m gone, I wonder?!)
I have been involved in this initiative since its very beginning back in 2004 because I have always had the feeling that it has transformative potential. But it needs to be well-designed and fit for purpose. £60m can only be start-up funding, it will never be enough to have an impact. These funds must therefore be used to lever other types of funds both philanthropic and commercial – but to do that it will have to be an attractive proposition to a whole range of potential investors. Therefore, the bank must be able to describe both its financial and social returns – and sell the appropriate message in to the correct investor. It must, of course, then deliver those returns.
The Big Society Bank definitely needs to be a wholesaler and have a market development angle as well as a product development function. As a wholesaler, it can support current intermediaries and will therefore tap into the good work done by specialists such as CDFIs over the last few years. It will need to develop the third sector into a strong market for loans and equity and see the whole gamut of social enterprises/charities as potential borrowers. The bank could use its resource to develop appropriate financial products for the market and can them licence them to intermediaries, thereby generating an income stream for itself and saving its own customers a great deal of time and money.
So, in the Big Society Bank we have the potential to create a really transformative vehicle for financing the whole of the third sector, and we are at a unique point in its gestation. Let’s get the vision in place – then make it happen.
Bernie Morgan, Chief Executive, cdfa