Big Society Capital

Big Society Capital Big Society Capital was established in 2011 as a social investment wholesaler to support social enterprises, community interest companies, and charities across the United Kingdom. It was created through an initiative linked to the Cabinet Office (United Kingdom), funded by capital from the sale of assets involving National Lottery distribution bodies and investments from Barclays and other financial institutions, aiming to grow the social investment market alongside intermediaries such as Social Investment Business and Big Issue Invest.

History

Big Society Capital arose from policy debates during the premiership of David Cameron and the term "Big Society" promoted in the 2010 manifesto associated with the Conservative Party (UK). The conceptual roots connected to social finance advocates including Social Finance and figures such as Sir Ronald Cohen who drew on earlier work in social impact investing from organizations like Joseph Rowntree Foundation and examples such as Grameen Bank and Acumen Fund. The organization was formally launched following reports by the Office for Civil Society and consultations with stakeholders including Charities Aid Foundation, Barrow Cadbury Trust, and Nesta (charity), and it received seed capital from the asset sale process related to the restructuring of some National Lottery distributors and a capital injection negotiated with Barclays PLC. Early years involved partnerships with delivery partners such as Big Society Capital-linked intermediaries including Resonance (social investor) and CAF Venturesome, while regulatory and sector engagement involved the Financial Conduct Authority and the Charity Commission for England and Wales.

Structure and Governance

Big Society Capital is governed by a board of trustees and executive leadership drawn from the social finance sector, including figures with backgrounds at institutions like Barclays, Goldman Sachs, and Baring Foundation. Its governance model was designed after wholesale banks and development finance institutions such as CDC Group and Triodos Bank, emphasizing independent trustees, investment committee oversight, and stakeholder advisory groups incorporating representatives from civic funders and philanthropic entities like Sainsbury Family Charitable Trusts. Oversight relationships involve reporting lines and accountability mechanisms with entities such as the Cabinet Office (United Kingdom) and sector regulators including the Financial Reporting Council, while operational management engages with fund managers regulated by the Financial Conduct Authority.

Funding and Investments

Initial endowment funding derived from the proceeds of the restructuring of National Lottery distributor assets and matched investments negotiated with Barclays, later supplemented by capital from social banks and philanthropic investors including Big Society Capital-aligned trusts and foundations such as Comic Relief and Joseph Rowntree Charitable Trust. The organization acts as a wholesale investor, allocating capital into social investment funds and intermediaries including Big Issue Invest, Resonance (social investor), CAF Venturesome, and fund managers linked to Bridges Fund Management. Investments have supported social housing projects associated with Peabody Trust and Habitat for Humanity-type models, community energy projects influenced by Community Energy England, and social care innovations related to NHS England pilot schemes. Financial instruments used include repayable finance, social impact bonds modeled after pilots such as the Peterborough Prison Social Impact Bond, and blended finance vehicles co-investing with institutions like Barclays and HSBC.

Impact and Evaluation

Impact assessment has drawn on social outcomes frameworks used by organizations such as New Philanthropy Capital and measurement methodologies exemplified by Social Return on Investment proponents and evaluators including Nesta (charity) and academic partners from universities like London School of Economics and University College London. Evaluations have considered metrics across social housing, employment support linked to Jobcentre Plus pilots, and community facilities similar to projects funded by Power to Change and National Lottery Community Fund. Independent reviews and reports conducted in collaboration with bodies such as the National Audit Office and sector analysts at The Guardian-reported studies have tracked capital leverage, intermediary capacity building, and outcomes for beneficiaries served by investees.

Criticism and Controversies

Critiques have come from commentators in outlets such as The Guardian and NGOs including Friends Provident Foundation over perceived tensions between market-driven investment models and mission-focused organizations like Shelter (charity), with debates invoking comparisons to controversies around austerity policies in the United Kingdom and privatization critiques often associated with Institute for Public Policy Research and Tax Justice Network discussions. Concerns raised by charity sector leaders including representatives from Charity Commission for England and Wales-influenced debates have cited issues around fiduciary risk, potential crowding out of grant funding as discussed by Nesta (charity), and governance transparency similar to questions posed in debates over quid pro quo perceptions in public–private partnerships involving banks such as Barclays and HSBC. Other controversies referenced evaluations by academics at University of Oxford and policy commentators at New Economics Foundation that scrutinized additionality, measurement of impact, and the balance between financial return and social return.

Category:Social finance