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April 6, 2012 / politicsbitesize

Big Society Capitalises

In the last few years the UK’s Coalition Government has reduced funding to charities, social enterprises and voluntary and community organisations. The Arts Council England had £100m sliced from its pot and as a result over 600 community and independent art based projects’ requests for money were rejected. The Voluntary Sector Cuts website is charting the demise of public sector support and reports 490 cuts for the year 2011-12 worth just over £75m. But, wait a minute, it seems all is not lost because David Cameron’s Big Society Capital has been launched today (Wednesday 4th April 2012).

In February 2011 the government published Growing the Social Investment Market: A vision and strategy, which outlined how they imagined the ‘Big Society’ would be funded. The Big Society Bank, now known as Big Society Capital, was central to this vision of the future and is to be understood as a ‘financial institution that aims to increase investment in society’. It is funded by £400m held in dormant bank accounts across the UK, with a further £200m coming from Britain’s four largest banks – Barclays, Lloyds, HSBC and RBS (two of which are state owned).

The initiative is heralded as ‘playing a critical role in speeding up the growth of the social investment market, and so boost[ing] the ability of social enterprises, charities, voluntary and community organisations (collectively “the social sector”) to deal with social issues.’ Big Society Capital will help ‘grow’ social organisations by lending them the capital they need to set up or expand their ‘businesses’. Sir Ronald Cohen, the chair of BSC, said in an interview on Radio 4 on Wednesday morning that the loans received by the social sector (or ‘social entrepreneurs’ as he kept referring to them) are to be given on the same proviso as all other loans. This means that any charities or voluntary and community projects who borrow money from Big Society Capital will have to ensure that they can pay back the loan, with interest.

Social enterprises under the Coalition Government are being treated in the same way as businesses and, according to the Prime Minister, this is to be encouraged:

Big Society Capital is going to encourage charities and social enterprises to prove their business models – and then replicate them. Once they’ve proved that success in one area they’ll be able – just as a business can – to seek investment for expansion into the wider region and into the country. This is a self-sustaining, independent market that’s going to help build the big society.’

Yet the voluntary sector – the community projects we see in our neighbourhoods, the charities that run not-for-profit outreach programmes – aren’t businesses and shouldn’t be treated as such. Most of the projects that help to improve people’s lives are delivered by volunteers: part-time workers or public sector workers who are in that line of work to make a difference, not a profit. It is troubling to think that the premise for Big Society CapitalWe enable organisations tackling social issues to grow by encouraging investments made for social as well as financial return – might one day become the norm. Society must be reminded that turning a profit is not a reason to help others: contributing toward making another person’s life more comfortable is much more valuable.

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