The Government has called on private and institutional investors to engage with the developing social investment market and benefit from more balanced portfolios and new approaches to corporate social responsibility.
There is a need for a new investment market that measures returns in social as well as financial value to close the gap between business and charity.
There are many small innovative civil society organisations that have succeeded in tackling the most persistent social problems but can’t get the finance to grow and repeat that success. There is need for a new way of doing things that helps charities and business talk the same language and build closer partnerships for the good of society.
The fledgling social investment market can give charities and social enterprises access to capital finance so they can grow their organisations at the right time. Investors will get new opportunities to build more balanced portfolios and contribute to society in a way that will show the social value of their investment.
The Big Society Bank, to be funded with money from dormant bank accounts, will be a catalyst for the market but there is also a need for mainstream financial leaders to step up to the challenge and offer their expertise and finance to drive this project forwards.
The Big Society Bank is expected to start operating in spring 2011 and be ready to make initial investments by summer 2011. It will support the development of the social investment market infrastructure and act as a ‘cornerstone investor’, taking the first steps in new ventures to open the way for other investors to join.
Other independent projects to build a social investment market are already underway. These include the Social Impact Bond developed by Social Finance and being piloted by the Ministry of Justice and research funded by the Rockefeller Foundation into the potential of a social stock exchange. There is also NESTA’s new Big Society Finance Fund to support the development of innovative new social investment products.