- This story was corrected on 9 October; please see final paragraph
Big Society Capital has received £181m from dormant bank accounts and high-street banks, and has made commitments of £140m, according to Nick O’Donohoe, its chief executive.
O’Donohoe told Third Sector that the Reclaim Fund, which collects money from dormant bank accounts, has so far passed on £109m to Big Society Capital, and four high-street banks that agreed to provide £200m of funding have contributed £72m to the wholesale lender.
Big Society Capital has so far committed funding to 30 organisations and expects between £20m and £25m to have been drawn down by the end of the year.
O’Donohoe said that BSC was investing at roughly the rate that was expected.
"Most of the people we invest in expect to put money out over a four-year period," he said. "Once we’ve made a commitment, it often takes quite a long time before the money goes out of the door."
O’Donohoe said that between 80 and 90 per cent of money from the intermediaries BSC backs was invested in regulated, asset-locked structures, such as charities, community interest companies and community benefit societies.
"We feel we were set up to help social sector organisations get capitalised," he said. "We don’t want to get involved in social washing, where people start calling themselves social organisations because they see a pot of capital they want to access."
But he said that changes were needed to make it easier for social enterprises to grow.
"If you want a social enterprise to grow fast, it has to be able to issue shares," he said. "But it’s difficult for asset-locked bodies to do that."
He said several changes could be introduced to make it easier, including a new structure to lock in social value in companies limited by shares, a stronger licensing structure for social enterprise companies limited by shares, or a change to the CIC structure to make it much easier to invest in CICs limited by shares.
He said that a recent meeting between BSC staff and corporate social responsibility specialists from large companies had focused on social investment and social enterprise, and had shown how difficult it was for non-specialists to identify a social enterprise.
"They want to hire social enterprises and invest in social enterprises," he said. "But they worry that they can’t identify them easily.
"It’s fine for people in the sector. They can look at an organisation and tell at a glance whether it’s genuinely focused on a social mission. But for those who aren’t specialists it’s much more difficult.
"We need a clearer definition of social enterprise."
O’Donohoe said it was possible that BSC might receive more than the £400m that it was originally projected to receive from dormant bank accounts in its first four years of operation.
The Reclaim Fund, which transfers money to Big Society Capital, has already received £542m in its first two and a half years of operation, and is still receiving substantial amounts of money. Of this, 20 per cent will be held back as a reserve to repay those with a right to the money, and about 15 per cent will be allocated to spend in Scotland, Wales and Northern Ireland.
- The story originally said that Big Society Capital had committed £15m of funding to 30 organisations.