The Prime Minister, David Cameron, today launched the £600m social investment wholesaler Big Society Capital by saying he hoped it would help charities grow in scale.
He said that although organisations such as Greenwich Leisure, Macmillan and the Big Issue had shown it was possible to provide large-scale solutions to social problems, other organisations had struggled to grow, which meant that voluntary services provided "patchwork" solutions across the UK.
"This is about providing finance to help society expand," he said. "We've seen that voluntary bodies and social enterprises are capable of delivering at scale.
"This is going to help charities prove their business model and replicate it elsewhere."
He said that he wanted to reduce the dependence of charities on "taxpayer handouts" in the form of grants, and increase instead the amount of money from government contracts.
"While direct grants from government may be going down, the money available is going up," he said.
Cameron said he was supportive of the prospect of more payment-by-results funding for the charity sector, including more investments using social impact bonds. The sector would find it easier to raise capital for payment-by-results contracts, he said.
"We're moving from the stop-start, hand-to-mouth way the sector's been funded to something I believe is very exciting," he said.
Big Society Capital will invest in organisations that lend money to charities and social enterprises. It is funded with money from unclaimed assets in dormant bank accounts, believed to be worth about £400m over the next four years, and with £200m from four major high-street banks.
Some investments have already been made using unclaimed assets money through the Big Lottery Fund.