The signs are that the government’s big society needs to get bigger than earlier estimates suggested, at least as regards social finance. A new report from the Community Development Finance Association finds a difference of up to £2.1 billion a year between the amount charities and social enterprises want to borrow and the amount of finance that is available.

The report, Mind the Finance Gap: Evidencing demand for community finance, says government estimates, published in 2011, in the European Commission notification of state-aid approval for Big Society Capital, put the deficit at around £1.7 billion per year (both this and the £2.1 billion estimate are top figures from a range), but since then demand has grown as other sources of funding have shrunk.

Who is to step into this breach? Community Development Finance Institutions (CDFIs) have become the dominant providers of finance to the sector, says the report, with two of them accounting for over 90 per cent of loan value in 2012. There is also a small but varied group of other Social Investment Finance Intermediaries (SIFIs), the largest of which to date have been government-sponsored funds. Most of them are not financially sustainable, says the report. In short, a variety of assorted players is struggling, often in an uncoordinated way, to put the props into place to support growing third-sector demand for finance. The report recommends ‘a partnership between public, private and social investors’ who ‘share common economic and social objectives’.

For more information
Third Sector online, 13 February 2013

To download the report
http://www.cdfa.org.uk/wp-content/uploads/2013/01/Mind-the-Finance-Gap-summary-report.pdf