British Prime Minister David Cameron on Wednesday launched his Big Society Bank — a 600 million pound ($953 million) fund to support charities and social enterprises in the same way that venture capitalists back entrepreneurs.
The bank, also known as Big Society Capital, is financed with 400 million pounds from unclaimed bank accounts which have been dormant for more than 15 years. Britain’s four biggest banks are contributing 200 million pounds over the next five years as part of their commitment to expand lending.
“Big Society Capital is going to encourage charities and social enterprises to prove their business models, and then replicate them,” Cameron said in a speech at the London Stock Exchange.
“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.”
The Big Society is Cameron’s concept of fostering more individual and community initiatives to deal with a wide range of social issues as his government slashes spending in a drive to reduce debt.
Opinion surveys have found that about half of voters think the Big Society is a good idea, but an even larger number say they don’t understand the government’s plans to implement it.
“Yes, of course government is important — the laws that we pass, the money we spend, the actions we take — but that is not nearly enough,” Cameron said. “Social problems need social action by all of society.”
Sir Ronald Cohen, a pioneering European venture capitalist who founded Apax Partners, is the bank’s chairman and Nick O’Donoghoe, former global head of research at JP Morgan, is the chief executive.
In a BBC radio interview on Wednesday, Cohen said the Big Society Bank would work through intermediaries to identify and support projects which generate income and thus are able to give the bank a return on its investment.
“There are pools of capital that are prepared to accept a combination of financial and social return,” Cohen said.
Cohen chaired the Independent Commission on Unclaimed Assets, set up in 2005 to find a use for funds in dormant bank accounts.
Dan Corry, chief executive of the consultancy New Philanthropy Capital and a former adviser to Cameron’s predecessor, Gordon Brown, wished the bank good luck but was cautious about what it could achieve.
“Yes, BSC has some serious money … but compared to the size of these problems it is not much. It is also not all going to come on stream at once and is only relevant to some organizations in the social sector,” Corry wrote on the consultancy’s website.
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