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Social Bank could unlock £9.8bn says Social Finance

Finance | Vibeka Mair | 6 Oct 2009

A proposed Social Investment Wholesale Bank could provide at least £9.8bn of extra funding for civil society each year, according to a paper by Social Finance on its vision for the SIWB. 

Social Finance has estimated that if 5 per cent of the £65.6bn of capital currently held in UK philanthropic endowments, 5 per cent of the £86.1bn of retail savings estimated to be invested in ISAs and 0.5 per cent of institutionally managed assets were devoted to social investment, around £9.8bn per year would be available to the sector, in addition to the £4.4bn grant funding that is currently available.

Commenting on the paper, Toby Eccles (pictured), development director at Social Finance, said: “We believe that social investment is a way to unlock real social change in the UK and create a different level of activity in the third sector.”

The paper advises that the SIWB should devote around £25m-£40m in the first two years to support existing intermediaries and sponsor the development of new intermediaries into the market.

It should also support third parties to analyse investment opportunities; market-make; work with investors to meet their needs; provide capital on a matched basis to encourage investment; fill gaps in the market infrastructure; develop measures for social and environmental impact; advise government on tax, regulatory, fiscal or legal changes to increase the flow of investment and raise awareness of social investment as an asset class.

CAF calls for more clarification on SIWB

Meanwhile, Charities Aid Foundation (CAF) and its investment arm Venturesome said it welcomed the government’s consultation on the form and function of a proposed SIWB which ends today, but also said its vision needs to be clearer and more focused.

Emilie Goodall, investment manager at CAF Venturesome, said:  “The SIWB has the greatest potential to help charities and social enterprises reach their causes by enabling the social investment market to grow.  But without dedicated focus on its wholesale function, the SIWB could distort the market by taking on roles that are already being fulfilled.”

“The consultation must be clearer about the SIWB’s role:  it must be a wholesaler – i.e. a provider of capital and liquidity to retail intermediaries in the market.  If the SIWB could properly fulfil this role, it would mean a more robust social investment market with stronger retail funders and more charities getting better access to capital.”

OTS calls for more responses

An Office of the Third Sector spokesman said it had received 35 responses to the consultation so far, but the OTS expected a large bulk to come in on the deadline for responses today.

“We haven’t received submissions from the people you’d expect yet. We expect a lot more to come in on the last day,” he said.

Charities minister Angela Smith urged people at the City Bridge Trust 800th Anniversary Conference this week to get their responses in quickly. 

"I’d like to thank those of you here today," she said, "who I know have already met with my officials and submitted views on this, which we will look at carefully.

"If you haven’t done so already, please help to make this happen I’d welcome your views – but please come back to us quickly."

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