The government's recent document on the Big Society Bank makes clear that it will not give out grants. Daniela Barone Soares, chief executive of Impetus Trust, argues that this will limit the Bank's capacity in the sector.
At Impetus, we welcome news of the Big Society Bank and congratulate the coalition government on making it a priority. Putting the ‘unclaimed assets’ money to good use has been talked about for many years so we are happy to see it becoming a reality.
We remain concerned that current thinking suggests money will only be disseminated in the form of loans and equity, which will be unappealing (and mostly inaccessible) to many small and medium-sized charities and social enterprises piloting the greatest social innovations and with the greatest potential to scale up.
It is a desirable goal to aim for, that all social investment would have a financial as well as social return, and one of the areas we work hard on at Impetus is helping charities to develop income streams so they are more sustainable. But as Sir Ronald Cohen, a pioneer of social investment, says, this will take time, and investment may be needed up-front to get organisations to the point where they are "investment ready".
For example, St Giles Trust, the organisation which pioneered the Social Impact Bond, was only able to be "investment ready" because it had previously got four years of capacity-building grants and expertise to build its infrastructure (which includes team, board and income-generation strategy) so that it was ready to access and welcome other sources of funding.
How was this achieved? Impetus, together with a cadre of industry specialists, worked with the St Giles team to assess each of its major service streams and St Giles’s ability to compete effectively; craft a long-term strategic plan for scaling up the services that were having the most success finding jobs for ex-offenders; develop a team capable of running a much bigger organisation; build the organisation’s capacity to win government contracts; and provide contacts for potential new funders.
We believe a portion of the money in the Big Society Bank should be earmarked for "intermediaries" to disseminate as grants (which should be monitored and evaluated, measured and multiplied) to help social enterprises scale-up to a point where they can take on debt or equity.
We believe the Big Society Bank should offer a full range of funding instruments, including grants, equity and quasi-equity, loans and bonds. The absence of grants may mean that some very important social issues will not be addressed by the Bank and surely the range of organisations will be much more limited.
To be clear, we are not advocating grants with ‘no strings attached’. Giving grants does not mean there is no accountability and transparency – or impact. The Impetus 'portfolio' of social enterprises and charitable organisations has been growing the number of people helped by 31 per cent per annum and reaching a quarter of a million people, while tackling some of the toughest problems in society.
