The third way
The third sector must prove it can spend our unclaimed millions, says Matthew Pike
Wednesday July 12, 2006
The needs are all too familiar: young people growing up without hope for the future; families trapped in debt; severe levels of wealth inequality; fragmented communities … The list is long and sobering for a country that is enjoying prolonged economic prosperity.
With the prospect of large amounts of new money now becoming available from unclaimed financial assets, Britain is presented with an opportunity not just to do more but to think boldly and differently about tackling these needs.
Above all, there is an opportunity for third sector organisations to finally have the chance to show what they are capable of – be they credit unions keeping loan sharks at bay, schemes to boost youth enterprise, community anchor organisations weaving a range of services together at a local level, or larger non-governmental organisations reconnecting with their community roots.
This is a moment where several opportunities can be brought together in a truly strategic way. We are, for example, seeing the rise of a new ‘public economy’ that is beginning to offer service delivery contracts to the third sector that will ultimately be worth many billions of pounds. There are assets of land and buildings that the government is willing to transfer into community ownership. The world of private capital is also standing in the wings, with a growing appetite for combining financial returns and social impact.
The Commission on Unclaimed Assets was launched to formulate plans for how money left dormant and unclaimed in UK personal bank accounts could best be utilised to achieve the greatest impact. Its interim consultation paper, published yesterday, proposes a central role for the third sector in building social justice.
Currently, too many third sector organisations are in the grip of short-term funding that is so geared to delivering service outcomes that there is little scope to build either the capacity or capital base required for efficiency or larger-scale impact.
There is already a range of specialist intermediaries – for example, Futurebuilders – bidding to fill the sector’s different investment and support gaps. We need to build on, rather than supplant, their efforts. But what we have is not enough. We need a champion for investment in the third sector, a UK-wide social investment bank (SIB).
Using unclaimed assets funds, the proposed SIB would capitalise and co-ordinate the efforts of new and existing providers of funding, finance and support to the sector – covering the full range of needs, from grants to loans, lease financing, quasi-equity and equity. But it would also act in the manner of a private investment bank, able to package and guarantee investment opportunities for private capital as well.
The ‘bank’ could offer forms of equity and quasi-equity for social enterprises. It could capitalise micro lending organisations and, at a later stage, offer tax-credit enhanced bonds to private investors, passing on the capital raised to these lenders – for example, to make loans to young entrepreneurs. It could provide a range of grants and loans to boost community ownership of assets.
Over time, a SIB will transform investment in the third sector. But is the sector up to the challenge? Can we move beyond an easy but too meagre diet of short-term grants? Can we become more entrepreneurial and businesslike?
Above all, are we able to give new energy to our abiding social justice mission – building the wealth, power and voice of the least advantaged people and communities everywhere?
· Matthew Pike is secretary to the Commission on Unclaimed Assets. He was previously the director of the Scarman Trust. Further information at www.unclaimedassets.org.uk
Related story: ‘Orphan assets’ should fund charity bank, says commission (11.07.06): http://www.senscot.net/view_news.php?viewid=4926