Big Society Capital states conditions for profit-making companies to receive investment

Nick O'Donohoe, chief executive of BSC, says for-profits that seek to create social value should not be excluded

Big Society Capital
Big Society Capital

Big Society Capital has published a governance document outlining the social criteria a company will need to fulfil before it can receive investment.

The "vast majority" of Big Society Capital investments will be in regulated social sector organisations, according to a blog accompanying the document, written by Nick O’Donohoe, chief executive of BSC.

But he said it "would be wrong to completely exclude companies that seek to create significant social value but have organised themselves as for-profit companies."

He said that BSC would permit some of the intermediaries it invested in to provide funding for for-profit companies so long as those investees met several criteria, including: having an asset lock; objects that made it clear it was "primarily concerned with providing benefit to society"; a constitutional requirement to exist for social benefit; safeguards to ensure its social mission continued in the case of an ownership change; and remuneration levels that "reflect social sector norms".

Several commentators have speculated previously about whether BSC would apply a more liberal definition to the kind of organisations it could invest in, including companies that do not have any protection of either assets or social purpose written into their constitution.

Jane Tully, head of policy at the Charity Finance Group, said that O’Donohoe’s comments would reassure many within the sector.

"Broadly we welcome the clarity provided by BSC’s definition of a social sector organisation," she said. "This gives some reassurance that the majority of investments will go to regulated social organisations.

"The criteria for for-profit organisations, and BSC’s clarity about its purposes, makes it clear that charities are being placed at the heart of this market."

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