Big Society Finance Fund

NESTA’s Big Society Finance Fund was set up to prototype wholesale social investment activities in order to demonstrate the role the Big Society Bank could play.

Finance for the future

Joe Ludlow from our Public Services Lab talks to Social Enterprise magazine about the role of social finance in helping social enterprises tackle the big issues of the future.

About the project

The project was set up in August 2010, and will conclude in March 2011 in time for the launch of the UK government’s Big Society Bank.

Two significant gaps in the evidence base for the development of the social investment market were identified and research to address this was commissioned from leading firms:

New Philanthropy Capital (NPC) were asked to set out the nature of current and future demand for capital from social finance intermediaries and to develop an understanding of the mix of financing the Big Society Bank will need to support.

This research 'Understanding the demand for and supply of social finance' is now available to download. A summary produced in February 2011 is also available.

Fairbanking Foundation with Ipsos Mori were asked to conduct a programme of qualitative and quantitative research to identify the types of individual investors and investment products that are likely to be important in the growth of the market for social or community investment.

Read the final report on this research 'Investing for the good of society'. A summary of the qualitative research is also available: 'How do individuals become social investors?'

Initial steps

In November 2010 we made a public call for proposals from social venture intermediaries who are currently or planning to raise capital from investors.

Our criteria sought simple, scalable and quick to deliver ideas where the Fund’s support would leverage a multiple of additional capital.

We received 89 proposals, seeking £45m of investment from the Fund. An independent investment advisory panel was recruited, chaired by Sir John Gieve, to select proposals for investment in two rounds.

In the first investment round we selected twenty two projects for further development. These projects were selected both for their quality and:

• to illustrate the nature of demand for capital the Big Society Bank will encounter
• to illustrate the range of offers to investors that might be possible.

Announcement of the four projects

At our event on 7th April we announced that we have selected four projects to work with more closely, in order to deepen our understanding of the legal, regulatory and practical issues involved in making these sorts of investments. These are:

• Finance South East with Resonance
• Fair Finance
• Investing For Good
• Impact Assets

Our report ‘Twenty Catalytic Investments' describes the portfolio of twenty proposals in more detail and gives our analysis of the social investment market and the role of the Big Society Bank.

More about the Big Society Finance Fund event

NESTA has been joined in the project by Panahpur - a charitable foundation that is using its treasury to develop the social investment market.