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Taskforce presses for social investment bank

Finance | Lucy Harvey | 3 Feb 2009

A voluntary sector taskforce has called for a social investment bank to be set up immediately to prevent years of good work from “withering on the vine”.

The idea for such a bank has been discussed for years, but in a report published today the taskforce, created by Acevo and the Department for Work and Pensions, says the government should provide immediate direct funding for an interim resource, and make a social investment bank a key priority for any funding released from the Unclaimed Assets register.

Currently the social investment bank is third on the list of government priorities for applying unclaimed assets, after youth centres and the prevention of financial exclusion. The taskforce believes all three objectives would be more likely to be met if the social investment bank was funded first and the rest was funded out of its returns on investment.

Bank would ‘transform sector’s service delivery role’

It says the bank would transform the role charities and social enterprises can play in the delivery of public services by:

• developing financial instruments and structures to raise capital for the third sector
• acting as a wholesale intermediary between suppliers and users of capital in the sector
• providing advice and support to market participants including research and other materials to attract additional finance into the sector, and
• working with governments, foundations and service providers to develop programmes of investment in specific markets where gaps are identified.

Chair of the taskforce Tony Hawkhead CBE, who is also chief executive of Groundwork UK, said: “It’s time to be radical and look at practical solutions to the problems presented to us by the current economic climate.

“The third sector unquestionably has the talent, knowledge and ability to build trust and offer genuine and lasting help, particularly to those people who are often the hardest to reach.”

Shrinking sector

He added: “Our sector can really help those most in need of support in these challenging times, but many of us are held back by the lack of suitable funding.

"A social investment bank would enable social enterprises and charities to remain focused on reducing the impact of recession on some of society’s most vulnerable people. Without it, the sector will shrink whilst the problems it exists to solve increase - and many years of good work will wither on the vine.”

The taskforce was established last summer with the aim of exploring a wider role for the sector in welfare-to-work reform. Its recommendations will now be presented to James Purnell, secretary of state for work and pensions (pictured).

Evidence for the taskforce was gathered from more than 50 third sector organisations, supplemented by an Acevo survey of 430 members delivering a variety of services, and includes research into the current public service delivery market and the role that third sector organisations play in it.

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