The City of London Corporation’s policy chairman praises the new partnership between the financial and social sectors
The launch of Big Society Capital this week is a landmark for the social sector and the City.
In recent years, innovation has unfortunately become something of a dirty word but I hope everyone can agree that Big Society Capital’s unique model represents a positive partnership between the social and financial sectors.
This partnership – typically taking the form of philanthropy and volunteering – has a long tradition in the Square Mile dating back centuries, even before the time of Dick Whittington.
But the launch of Big Society Capital – backed by the Project Merlin Banks – is a vital step towards enabling structured finance to play a greater role in providing the funding needed by the third sector. This is particular timely given the challenging economic environment that community and voluntary organisations are facing today.
The City of London is delighted to welcome Big Society Capital as the new kid on the block – both as a newcomer to the Square Mile with offices on Fleet Street but also as the world’s first institution of its kind.
As the Prime Minister noted, finance is the lifeblood not just of business but of society as a whole. Big Society Capital will play a vital role in channelling investment to deliver jobs and growth across communities.
Much has been made since the credit crisis of a supposed division between the ‘real’ world and City business but this is a fundamentally flawed analysis – both are interconnected and interdependent.
The City stands ready to work with Big Society Capital to support investments which provide social as well as financial returns.
A thriving social investment market that benefits people across the country and from different communities is something we are all committed to delivering.
Shifting capital from dormant bank accounts to where it is most needed will enable not-for-profit social enterprises to grow and deliver much needed social services. It will also enable budding entrepreneurs to dream big and make a larger impact on issues close to their heart, whether it is unemployment, crime, illness or other important areas of work. The innovative approach to financing the social sector will encourage charities and social enterprises to prove that their business models are commercially viable. This can only be a good thing as the most efficient organisations prosper and expand into new regions or markets.
Big Society Capital’s biggest innovation is unlocking investment on the basis of social returns, rather than purely financial. This distinction is something City firms have long understood but translating that into a market to help social entrepreneurs realise their vision is easier said than done.
The new kid on the block seems to have done that – and it is something we can all support.
Stuart Fraser is policy chairman at the City of London Corporation.
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