Lord Nat Wei, government adviser on the Big Society, has said the government and the Charity Commission are talking about guidance for charities on investment.

Lord Wei was speaking at an European Association for Philanthropy and Giving conference on social investment, where he delivered a speech on the role of mainstream finance in the development of the Big Society and the Big Society Bank.

He said: “We are looking at charities tapping into endowments and at mission-related investment which doesn’t take a risk approach but a more positive approach.”

The approach was one of the ideas Lord Wei said could encourage money flow into the social investment market.

He said the Big Society Bank would have a large role to play and suggested it could have a role in aggregating deals. Wei added:

“I’d like it to get an IPO [initial public offering] facility for social investment. Without it we won’t get demand and deal flow won’t come through when the area needs scale.”

Wei said scale was vital to the social investment market, but admitted it was tricky and start-up capital would be necessary to create chains:

“We need social venture intermediaries, players who can structure products and prove they work. We need them to bridge between small or non-existent projects that work but need someone to help it to create scale like social franchising.

“The problem is deal flow. There is political appetite for it but the challenge is scale.”

Wei also said regulation was a barrier for charities in investment:

“The Office for Civil Society and No.10 know that social organisations are often crowded out by regulation. When they review the Charities Act it is important they don’t forget social investment and remove barriers.”

A Charity Commission spokesman said it would be publishing a consultation on draft new investment guidance in November. It began reviewing its CC14 guidance in September last year.