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Big Society investment fund launched

The Government has launched a new financial institution – Big Society Capital – aimed at financing charities and community groups.

The fund has a total of £600m, with Barclays, Lloyds, HSBC and RBS contributing £200m, and a further £400m coming from unclaimed money left languishing in dormant accounts.

It will invest organisations that provide affordable finance to social projects. The projects must prove they can generate sufficient income to repay an investment, and upon doing so could seek further investment for expansion.

Big Society Capital is chaired by leading venture capitalist Sir Ronald Cohen, who said its aim was to create a ‘thriving market for social investment. It will allow an organisation which today is trying to deal for instance with prisoners who are being released and ending up in unemployment then back in prison... to get the capital to increase the size of their organisation and to improve the lives of these prisoners.’

Sir Cohen explained that the Government would pay the fund some of the return on its investments by giving it a cut of any savings the Treasury made because of the charitable work being financed. For example, if a scheme was shown to have reduced the reoffending rate of prisoners, then the Government would pay the fund some of the money it had saved on the cost of imprisoning them.

David Cameron’s ‘Big Society’ concept has often been derided in the media but the Prime Minister has remained committed to the idea.

Launching the scheme he said: ‘Big Society Capital is going to encourage charities and social enterprises to prove their business models and then replicate them. Once they've proved that success in one area they'll be able - just as a business can - to seek investment for expansion into the wider region and into the country.

This is a self-sustaining, independent market that's going to help build the Big Society.’