Office of Third Sector begins consultation on 'wholesale' social investment bank

Plans say bank would not give money to front-line charities, but to 'retail institutions'

Plans for a social investment wholesale bank that will "invest in those who invest in the third sector" have been released by the Office of the Third Sector.

A three-month consultation on the design and functions of the bank, which will be funded by unclaimed assets from dormant bank accounts and private and public investment, has started today.

The bank will seek to increase investment in organisations that deliver benefits for society and the environment, and to achieve a "triple bottom line" of economic growth, social cohesion and sustainable development, the consultation document says.

According to the proposals, the bank will not give grants or loans to front-line organisations, but will instead provide funding for social investment "retailers" such as social lenders, community development finance institutions and socially responsible investors.

Financing could take the form of loans, grants, underwriting or equity investments. The bank could also create new retail investment vehicles or broker partnerships between existing institutions.

The proposals say the bank will raise capital from private and public investors such as pension funds and local councils through share issues, taking deposits and borrowing, and will offer a return. It may also attempt to attract "philanthropic resources".

The bank will also perform an advisory function for institutions and individuals wanting to engage in social investment. It will work to improve understanding of third sector investment opportunities and combat the reluctance of grant-makers and donors to carry out social investment.

The consultation document says the Government believes the Social Investment Wholesale Bank should be independent and financial ownership should be held, mainly, "outside the Government".

Third sector minister Angela Smith said: "I look forward to hearing evidence and views on how this bank would work with and for our third sector to ensure that charities, voluntary groups, social enterprises, co-operatives and mutuals grow stronger."

Stuart Etherington, chief executive of the NCVO, welcomed the consultation, but added. "It is important that discussions start around how the bank will be financed, to make sure it is properly capitalised."

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