Social finance providers rail at new Futurebuilders award

Finance | Gareth Jones | 9 Mar 2009

Charity Bank and Triodos Bank have slated the Department of Health for awarding the contract for its new £100m Social Enterprise Investment Fund (SEIF) to Futurebuilders, calling it “questionable at best”.

In a statement, they said the decision on the fund, which will support organisations that are, or are aiming to become, social enterprises delivering health and/or social care services, could undermine social financiers – such as themselves.

"It provides yet more money to a government funder which is relatively new to the social finance market, unaccountable to a financial regulator or to wider stakeholders, and which fails to pay a return to investors - factors which raise important questions about how sustainable it really is.

"Ultimately, short-term funding solutions from government risk displacing existing sustainable private sector capital. There is an active and growing social finance market in the UK. This includes but is not limited to Triodos Bank and Charity Bank.

"Together, we welcome new competitors to the market. But if their contribution is to genuinely improve opportunities for the sector, it is important that the contribution of Futurebuilders and SEIF addresses market failure where risk pricing cannot yet be determined with confidence.

"Both organisations, and the Department in setting its risk expectations, should be very clear about their position in the market to potential recipients of funding, so their activity does not displace established and effective players that already serve the sector well."

Range of financial products

Futurebuilders England and Partnerships UK will begin work with the Department of Health’s Social Enterprise Unit and an independent investment panel from June 2009. The three-year fund will comprise grants, loans, and new equity investment products as well as tailored business assistance.

The contract takes Futurebuilders’ total fund value to £330m. Chief executive Jonathan Lewis (pictured) said the organisation had won the contract on the back of building “solid foundations with the main Futurebuilders fund”.

Directory: Futurebuilders England
Who's Who: Gareth Jones

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