The Big Society Bank has been renamed Big Society Capital and has unveiled its first chair and chief executive.
The organisation also today announced a first investment from dormant bank account funds, and said it had agreed "heads of terms" for £200m in equity funding from four high-street banks.
Sir Ronald Cohen, the founder of private equity firm Apax, will be chair of Big Society Capital on an interim basis. Nick O’Donohoe, the former head of global research at JP Morgan, will be chief executive.
The pair were responsible for drawing up a blueprint for the bank, which received government approval earlier this year, and have been involved in its creation since the early stages.
Cohen, who has previously said he would not chair the bank, said he would act only as interim chair until a permanent appointment could be made.
Big Society Capital will be independent of government. It will be divided into Big Society Capital Ltd, a company limited by shares that will look after the money, and the Big Society Trust, a company limited by guarantee, which will provide oversight of Big Society Capital Ltd but will not have any day-to-day functions.
The organisation will also create a charitable foundation to receive any profits from its investments, as well as any donations Big Society Capital might receive.
The four high-street banks investing money in the new organisation will have one seat between them on the board of Big Society Capital Ltd and 20 per cent of the voting rights. The trust will hold the other 80 per cent.
The trust board will include a number of figures from the voluntary sector, including Peter Holbrook, chief executive of the Social Enterprise Coalition, and Sir Stephen Bubb, chief executive of chief executives body Acevo, which will rotate its board membership every three years with the National Council for Voluntary Organisations.
Eventually, Big Society Capital will have access to capital from dormant bank accounts, estimated at £400m, as well as the money from high-street banks. However, it will not have access to these funds until it receives approval from the Financial Services Authority and the European Commission, both of which are expected to take several months.
Until that point the funds will be held by the Big Lottery Fund. The BLF has formed a committee to disburse those funds, which includes its own nominees, O’Donohoe and Cohen, and other members of the Big Society Capital board.
That committee’s first investment will be about £1m in the Private Equity Foundation, half of which will be equity in a fund that will make payment-by-results investments in charities supporting disadvantaged young people. The other half will support the PEF to attract other investors into that fund.
Cohen said that he felt that it would take a "10 to 20-year project" before social investment became a fully mature market.
"But we should expect to begin to see results after five years," he said. "We’ve set criteria against which you can judge our success: the number of organisations existing, their size and their ability to maintain a high level of activity.
"And the total amount of money attracted into the sector should be a multiple of the amount we’ve invested directly."
Board of Big Society Capital Limited:
- Sir Ronald Cohen, chair (the Portland Trust and Bridges Ventures)
- Nick O’ Donohoe, chief executive (formerly JP Morgan)
- Dawn Austwick (Esmée Fairbairn Foundation)
- David Carrington (independent consultant)
- John Kingston (Association of Charitable Foundations)
- Geoff Mulgan (National Endowment for Science Technology and the Arts)
- Dai Powell (HCT Group)
- Lady Susan Rice (Lloyds Banking Group)
- Danielle Walker Palmour (Friends Provident Foundation)
Board of the Big Society Trust:
- Sir Richard Lambert (University of Warwick)
- Ian Davis (formerly McKinsey & Co)
- Baroness Pitkeathley (House of Lords)
- David Robinson (Community Links)
- Sir Stephen Bubb (chief executive of Acevo), ex officio, in rotation every three years with NCVO
- Peter Holbrook (chief executive of Social Enterprise Coalition), ex officio
- Gareth Davies (Cabinet Office), ex officio
- Sir Ronald Cohen (Chair of BSC), ex officio