Puzzling that Ministers don't plan to continue a successful model of investing

Wednesday 9 June 2010

Responding to an exchange between Minister for Civil Society Nick Hurd MP and his Shadow, Rt. Hon Tessa Jowell MP, at Cabinet Office Questions this morning at which the Minister stated plans to divert returns from Futurebuilders investments to create a new infrastructure to support community organisers, The Social Investment Business Chief Executive Jonathan Lewis said:

“Up to now, the new coalition government has stressed the importance it places on evaluation and transparency in forming policy. Which is why it is so puzzling that Ministers are not planning to continue with this type of engaged investment – as it has been independently evaluated, and shown to be highly effective not once but twice with precisely the type of organisations that the coalition is seeking to help. If the aim is to build the Big Society, then this method is the best means to deliver it.

“This investment model – providing grants, loans and business support – has been proved to be the best way to help civil society organisations become financially sustainable. Grants have an important role but separate independent evaluations by Sheffield Hallam and London Metropolitan Universities found that our method has a truly transformative effect on the sector in a way that decades of grants has not. And a report this week by Demos called for our model to form the basis of all future government investment in community regeneration. We are very keen to continue to work with the government to help realise a sustainable and efficient Big Society by employing our expertise in this proven, and highly successful method of investment. We have seen hundreds of small community organisations blossom with this type of help. We want to help thousands more.”

Commenting on the suggestion that government funds of this type distort the market, Jonathan Lewis added:

“We are a funder of last resort and have a rigorous process that ensures that our investees could not have received investment from another source. The presence of a Charity Bank trustee on our credit committee bears witness to that. In fact, we work closely with the high street banks and in many cases our commitment to pick up the riskier, ‘unbankable’ parts of loans is instrumental in leveraging millions of pounds of funding from commercial lenders into the sector.”

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1. For further information or interviews, please contact The Social Investment Business press office:

Liz Banks - 0207 842 7726/ 07809 504072  liz.banks@socialinvestmentbusiness.org

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2. The Social Investment Business, the fastest growing social investor in the UK, exists to help social enterprises, charities and community organisations do more of what they do best – supporting people and communities most in need. We help organisations prosper by providing innovative financial solutions, business support and long term strategic thinking.

www.thesocialinvestmentbusiness.org @TheSocialInvest

3. The Social Investment Business manages Government funds on behalf of the Office for Civil Society, the Department of Health and the Department for Communities and Local Government, with over 1,000 active investments. These range from £3,600 to help a small organisation bid successfully for a public sector contract, to £6.7million to help a large national charity establish and develop innovative new services for children and young people.