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Tim Draimin

Nesta proposes new regulatory framework for social finance - Third Sector - 0 views

  • Nesta proposes new regulatory framework for social finance
  • By David Ainsworth, Third Sector Online, 23 June 2011
  • With the law firm Bates Wells & Braithwaite, it wants to get rid of 'onerous' restrictions and make it easier to lend money to charities and social enterprises
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  • They would be overseen by a social finance regulator that would operate within the proposed Financial Conduct Authority, the successor to the Financial Services Authority.
  • The framework would create new legal categories of 'social investment' and 'social investor'. The two organisations hope to persuade the government to make it into law.
  • The National Endowment for Science, Technology and the Arts and the law firm Bates Wells & Braithwaite have proposed a new regulatory framework for social finance aimed at making it easier to invest in voluntary sector organisations.
  • "At the moment, it's easier to give £100 to charity than to lend £100 to charity," said Luke Fletcher, an associate at Bates Wells & Braithwaite and author of the report.
  • The new framework, he said, would make it easy for charities and social enterprises to create a financial prospectus for a bond or share offer, without the need to offer the tight protections for investors that are currently required.
  • "The main target for this would be the mass affluent, who are not currently considered sophisticated investors," Fletcher said. "Charities would like to create offers targeting these people, but they find the legal restrictions too onerous."
  • Fletcher said there were already exemptions for community benefit societies, formerly known as industrial and provident societies, and he wanted to extend these to all third sector organisations. "I think there's a chance of getting this into law now," he said. "There's a real window of opportunity. The reform of the Financial Services Authority is already under way, there's big interest from government in social investment and there's a drive to reduce red tape for the sector." The Cabinet Office has expressed support for the idea of a new regulatory framework in its strategy paper Growing the Social Investment Market, in which it said it would "seek further evidence on the impact of the regulatory framework on social and community investment to assess whether it is proportionate". One of the six key recommendations in Lord Hodgson's report on red tape in the third sector, Unshackling Good Neighbours, was the creation of a class of "social investors" who could invest under less strict guidelines because they understood they were receiving both a social and financial return.
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    NESTA report on new initiative to simplify how charities and public benefit organizations put together a prospectus for raising money through a bond. The proposal also ties into a previous report on reducing red tape for charities (Lord Hodgson's "Unshackling Good Neighbours") that recommended the creation of a class of "social investors" who could invest under less strict guidelines because they understood they were receiving both a social and a financial return.
adamspence

Charities Aid Foundation launches new social investment fund - 1 views

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    Interest in philanthropy is at an all time high and with many major donors looking for new ways to help charities and achieve the maximum impact with their donations, the Charities Aid Foundation (CAF) has today launched a new social investment fund, the CAF Social Impact Fund. Philanthropists can invest their charitable capital in the fund which will provide loans for charities to help them become stronger and expand. Once loans are repaid the funds will be recycled enabling philanthropists to support more charities.
Tim Draimin

Showing social investment works - Civil Society - Finance - In-depth - Interviews - pro... - 0 views

  • Showing social investment works
  • Finance | Vibeka Mair | 20 Jun 201
  • In August, Jonathan Lewis leaves social lender Social Investment Business to become chief executive of NHS spin-out Bromley Healthcare. Vibeka Mair interviews Lewis on his time with the UK’s largest social investor.
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  • It’s getting off to a slow start, but the Big Society Bank looks set to mark a new dawn for social investment, bringing a potential £400m into the market. But before this, in 2007, a new-style social lender entered the market with a relatively modest £15m, before growing into one of the largest social investors in the country.
  • The organisation started off as the Adventure Capital Fund, which then became known as Futurebuilders – generating the organisation's biggest fund to date, finally settling on Social Investment Business – a clear catchall to describe the organisation, and a nod to its ambitions to run the Big Society Bank, a concept known as the social investment wholesale bank under the Labour government.
  • Despite its positive effect in financing the charity world, some have criticised it for growing so large so quickly – it has managed a number of funds on behalf of the government and is worth around £400m. Lewis makes no apology:
  • Its outgoing and first chief executive, Jonathan Lewis, says he is most proud that Social Investment Business has shown that social investment works:
  • Lewis is also proud that the write-off rate of loans with Futurebuilders was so low, especially since it funds organisations which can’t access traditional finance.
  • “Through Futurebuilders, we lent £120m to organisations which couldn’t get bank finance, and the culminative write-off rate on that money over six years is less than 4 per cent. I’m extremely proud of this fact.”
  • “With Futurebuilders (the £215m fund managed by Social Investment Business on behalf of the Office for Civil Society) we were supposed to help charities win something like 300 contracts. In fact they won over 800, which shows that if you give them a bit of appropriate help they can win lots of contracts by providing innovative and transformative services.”
  • “Though it was slightly unpopular to grow this quickly, I think creating a large social investor moves the market on a little bit, and the market is going to be moved on again by the Big Society Bank.”
  • Lewis’ time at Social Investment Business could be viewed as the frontier of social investment. His new role follows a similar pattern. Lewis leaves to head the staff-run NHS social enterprise spin-off Bromley Healthcare, one of many public service providers deciding to become a mutual under minister for the Cabinet Office Francis Maude’s new "right to provide" agenda. Maude is leading a drive to support employees of public services to set up mutuals.  Bromley Healthcare is a staff-run healthcare provider organisation rather than a commissioning one. Lewis joins it as chief executive in August.
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    Retrospective observations on the role of Futurebuilders, the 215 million pound fund run by Social Investment Business on behalf of the Office for Civil Society
Tim Draimin

Big Society Bank could be delayed until next year - Civil Society - Finance - News - pr... - 0 views

  • Big Society Bank could be delayed until next year
  • The creation of the Big Society Bank could be delayed until next year as the government is still trying to secure state aid exemption from the EU, according to Sir Ronald Cohen, independent adviser to the Cabinet Office.
  • Sir Ronald (pictured) revealed the delay at this morning’s Public Administration Select Committee (PASC) meeting on the subject.
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  • He told MPs that the matter could take “some months before it is completed”, but added that there was an agreement with the Big Lottery Fund to make investments in its place in the meantime.
  • Chair of the PASC, Bernard Jenkin MP, asked if the situation was frustrating. Sir Ronald said he had gone through the same issue when he set up the social investment company Bridges Ventures. He added: I am confident that we will get state aid exemption for the Big Society Bank from the EU and that, in fact, the EU will turn out to be a big proponent of social investment.”
  • During the meeting, Sir Ronald also addressed the ongoing negotiations between the big four high street banks and the government on the proposed  £200m investment in the Big Society Bank, after Conservative MP Charlie Elphicke said a discussion with the Royal Bank of Scotland’s Sandy Crombie had revealed he had reservations.
  • Sir Ronald said there was more room for agreement between the banks and government and stated that an announcement was expected in the next few weeks.
  • He added that the £200m investment, which will be on commercial terms, would not be at normal market rates and would not necessarily be a typical loan.
  • At the meeting, Sir Ronald also said it was projected that the Big Society Bank would be cash-positive in seven years. After Jenkins asked if there would be enough deal-flow, he said he was confident that the supply of money would create demand.
  • However, Sir Ronald admitted it was a challenge to galvanise local engagement after MPs asked whether smaller charities would find it difficult to engage with the Bank.
  • Sir Ronald also said the Big Society Bank may have to change its name as it wasn’t a bank.
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