Charities Aid Foundation (CAF) has warned that the Big Society Bank, as detailed yesterday at the Government's Social Investment Summit, hosted by Frances Maude MP, will disappoint many charities and social enterprises if it focuses on financial return over social impact.
CAF argues that, by expecting the Bank to be financially self-sustainable from the outset and operating on a commercial basis, there is a risk that it will run contrary to its mission of ensuring charities and social enterprises have access to affordable capital.
Emilie Goodall, Senior Investment Manager at CAF Venturesome, the Charities Aid Foundation's social investment fund said: "The concept of the Big Society Bank and the £300 million of capital being made available is good news. However, we are concerned that if the funds are only made available on a commercial basis the interest rates could be too high for many charities and social enterprises.
"The focus needs to be on social return over financial return. This is a new market and from our experience of making loans, whilst there is a very high rate of loans being repaid, there are few social projects which generate a financial profit. Their main purpose is rightly to deliver a positive social impact.
"The emphasis of the Big Society Bank on helping charities and social enterprises to deliver public services may also exclude the bulk of the sector as most don’t do this but they still need access to capital. The result could be that the Bank doesn’t generate the wide-ranging positive impact that the Government and the sector wants and needs."
Since its launch in 2002 CAF Venturesome has offered over £22 million to 280 charities and social enterprises.