Big society capital (BSC) – definition and meaning

Big Society Capital (BSC) is an entity formed by the British government in April 2012 with a £600 million investment to invest in organizations that support projects that have a positive social impact, i.e. social investment.

Social investment is about investing or lending money to achieve a social return, as well as a financial one.

BSC, which was established by the Cabinet Office, was the world’s first social investment institution of its kind.

The funds came from dormant banks accounts through an independent Reclaim Fund and the country’s four leading high street banks.

Big Society CapitalInformation Source:

A dormant account is one where there has been no financial activity for a long time. In most cases, the account holders have forgotten about them.

BSC was set up as part of the Dormant Bank and Building Society Accounts Act 2008. It defined BSC as an entity that exists “to enable other bodies to give financial or other support to third sector organisations.”

Big Society Capital is a social investment wholesaler

BSC does not invest directly in frontline organizations; it is a ‘social investment wholesaler’ which invests in Social Investment Finance Intermediaries (SIFIs), which in turn provide funding and support to social sector organizations.

BSC gets its funds from two sources:

– British banks and building societies pay money from dormant accounts into Reclaim Fund Limited, which holds onto enough funds to meet reclaims of any account holders, and passes what is left to the Big Lottery Fund. The Big Lottery Fund releases the English portion of this money to the Big Society Trust to invest in BSC. Dorman accounts should provide BSC with up to £400 million, the entity says.

– The UK’s four leading high street banks – RBS, Lloyds, HSBC and Barclays – have each pledged to invest up to £50 million in BSC.

According to Big Society Capital:

“For charities and social enterprise, social investment can: Provide a new source of funding; fill financing gaps for innovation and growth; and develop sustainability and autonomy. For financial investors, social investment can: Enable capital to be recycled for onward investment; deepen engagement with communities; and help to share a new responsible form of capitalism.”

Video – Big Society Capital’s mission

In this video, BCS Chief Executive Nick O’Donohoe explains how and why it is supporting the development of the social investment market in the UK.