A £20m fund which will make loans of up to £1m to community organisations has been launched today by Social and Sustainable Capital.

The Community Investment Fund is the first fund launched by Social and Sustainable Capital (Sasc) which was set up in 2012 to provide social investment, and is itself a social enterprise and a limited liability partnership.

The fund has received two promises of £10m support from social lenders the Social Investment Busines (SIB) and Big Society Capital. Initially the two bodies have invested £3m each.

The Community Investment Fund will invest in charities, asset-locked social enterprises, and other bodies which meet the Big Society Capital definition of a social sector organisation.

Investee organisations must be “community-led” – focused at a regional or local level, rather than a national one. Most investments are expected to be secured against the investee’s assets.

The fund is already open for applications, and does not have a closing date.

Social and Sustainable Capital was founded by Ben Rick, a former managing director at Bank of America Merrill Lynch, and Adam Knight, formerly a managing director at Goldman Sachs and Credit Suisse.

Rick said that he had been motivated to set up the fund after 19 years in investment banking.

“I began to feel there had to be a better way than making loads of money and giving some away,” he said. “I thought I might become the chief executive of a charity but quickly realised my skill set wasn’t really right for that.

“I met Big Society Capital and it became clear they were keen to back people who were credible. We originally approached the Social Investment Business while we were looking for money from the Investment and Contract Readiness Fund to develop an idea. Between us we put two and two together, and it became clear that this was a good match.”

He said the fund should be able to make £2m investments in the future, and would target “mid-single digit returns”.
He said that Sasc would look to set up other funds and would also approach other investors to put money into the existing fund.

“For this fund we’re targeting those who are familiar with social investment,” he said. “For others, we’re targeting those who haven’t made the leap yet.”

Jonathan Jenkins, chief executive of the SIB, said his organisation had found it useful to work closely with Sasc, which now operates out of the SIB offices.

“They’re regulated by the Financial Conduct Authority and they have credibility in the city,” he said. “We have contacts and credibility in the sector. It’s a good match.

“We looked at setting up a regulated entity when we first started thinking about this a year ago, so when they came along, it seemed serendipitous.”

He said his organisation was also looking at launching other funds.

“I’m fairly confident there will be at least one more to follow,” he said. “This is the first time we’ve put our own money into another organisation.

“I would imagine our next fund will be one where we’re actively looking to raise external investment.

“One possibility is a fund that offers simple unsecured lending.”