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Government consults on Social Investment Bank

Finance | Gareth Jones | 15 Jul 2009

The government is today launching a consultation on the proposed Social Investment Wholesale Bank, with the purpose of defining how such a bank would operate.

Lasting 12 weeks, the consultation presents a range of possible functions for the bank, such as attracting money from other investors and helping to raise funds for existing social investors.

It suggests that the bank could be independent of government but regularly reporting its social, financial and environmental impact, and working with other investors where possible.

Examples given of the bank’s possible activities include financing Charity Bank’s expansion into new areas, supporting grant trusts interested in investing in social enterprises, and providing finance to credit unions offering fair finance to those unable to access affordable credit.

Further to investing in existing intermediaries, the government suggests it could “address market failures in the social investment market which mean the third sector cannot currently access adequate and appropriate finance”.

‘Resilient source of finance’

Stephen Timms (pictured), financial secretary to the Treasury, said: “A strong and resilient third sector needs a resilient and sustainable source of finance.

“This consultation represents an important opportunity to explore the concept of a Social Investment Wholesale Bank, and the role it could play in developing and adding value to the social investment market in a sustainable way.

“Such an institution could help deliver the government’s commitment to supporting fair markets and to building the financial sustainability in the third sector that will allow it to grow and thrive.”

Speaking at a press briefing, the Office of the Third Sector’s director general Campbell Robb said: “There’s no other similar institution in the world, so that’s why we need to get as many opinions as possible to make sure we get it right.”

He added: “It could take five, 10, 15 years for it to really reach critical mass, and that’s why we have to get it right now.”

Futurebuilders considers additional European bank

Meanwhile, Futurebuilders England is considering a ‘scoping’ exercise on a European Social Investment Bank, which would be led by the Centre for Social Innovation at Heidelberg University.

Stephen Bubb, chair of Futurebuilders, told Charity News Alert that there were already signs of backing from France, Italy, and Spain and that he was planning to meet the president of Credit Co-Operative in Paris to discuss the topic.

“The Futurebuilders model is already of great interest internationally, including with the Obama Centre of Innovation,” Bubb said. “The social investment model works well here, so we will see if there is scope to offer a Europe-wide social investment bank.

“We are still in the initial stages and looking to see whether it will fly.”

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