A new £60m grant fund to support charities to get ready for social investment has been launched by the Office for Civil Society using money repaid from the Futurebuilders loan fund.

The government has also published a new strategy to support social investment, in which it promises to pilot a guarantee fund to support crowdfunding and to seek state aid approval to allow the sector to access larger amounts of social investment tax relief.

£60m investment readiness fund

The new grant fund will help charities interested in social investment develop the skills and business plans to take on funding, and will be available over the next decade, the Office for Civil Society (OCS) announced today.

The fund will be based on the £10m Investment and Contract Readiness Fund, run by the Social Investment Business on behalf of the OCS.

The money will come from the Futurebuilders loan fund, which is also run by the Social Investment Business, and which lent more than £150m to charities and social enterprises under the last government.

Repayments from that fund have so far reached £48m, and another £15m is expected over the next two years, with repayments of up to £6m a year thereafter. Of that money, £20m has already been committed to the social outcomes fund, which helps finance social impact bonds.

“This investment is specifically ring-fenced to support high potential social ventures that struggle to access finance and which could benefit from business capacity building support in preparing to bid for social investment,” a spokeswoman for the OCS said.

The OCS said it will “endow a market champion” to administer the fund in the near future.

Social investment strategy

The government also published its social investment strategy as part of its progress report on the growth of social investment.

Proposals in the strategy include:

• A pilot guarantee fund to support crowdfunded social investment. The fund will be new money which has not been committed but the OCS has not confirmed the value of the fund.
• A promise to assess the suitability of existing rules around the promotion of investments to see whether they are suitable for social investment, based on research published today by the Social Investment Research Council, which says the current Financial Promotions Regime is a serious barrier to social investment.
• Plans to seek state aid clearance for a larger social investment tax relief scheme, a consultation on allowing relief to investors in social finance funds, accreditation for social impact bonds, and an online application process to become eligible for SITR.
• Awareness-raising campaigns around social investment and social enterprise
• A series of support measures for social impact bonds, including a standard cross-government rate card, a map of all SIBs in existence and a “central commissioning fund” – believed to be a top-up fund which backs SIBs when they make savings for several departments, none of which can afford a SIB by itself

Two social impact bonds announced

The government also announced new social impact bonds likely to be worth £4.2m between them.

One will reduce loneliness among older people in Worcestershire, the first to tackle this issue in the UK. The bond is being commissioned by Worcestershire County Council and local Clinical Commissioning Groups.

The other, in Birmingham, will support vulnerable young people who have either been taken into residential care or who are at risk of entering care.

Social Impact Investment Taskforce meets

The UK also hosts the Social Impact Investment Taskforce today - a meeting of 200 experts from around the world, led by Sir Ronald Cohen. The taskforce is expected to publish a report in September which will contain recommendations for growing the social investment market.

Minister for Civil Society Nick Hurd (pictured) said: “Engagement in social investment around the world has reached new levels and the UK is leading the way in this global movement.

"Today’s announcements show our commitment to building a market that is accessible to everyone and reflect the huge progress we have made in turning our vision into reality.”