Government must act to make Cameron’s social finance dream reality – report

27 June 2013

The Government must act to review City regulations to counter widespread myths that are holding back the expansion of social investment, according to a new report by the Charities Aid Foundation (CAF) published today.

Britain could become the world leader in social finance if the Government can allay the fear of regulation that risks strangling the social investment market, according to the report by CAF and Legal & General, a major provider of savings solutions and investments to its clients.

Last month David Cameron hailed social investment as “a great force for social change on the planet”.

Today’s report warns that uncertainty and lack of understanding about risks and regulations covering social investments prevent banks and other investors from developing schemes that effectively finance charities and social enterprises.

The report also calls on banks, pension providers and other major investors to build social investment into their mainstream commercial operations. It urges Government and social investors to improve awareness of social investment opportunities and share expertise to help social enterprises make themselves attractive to investors.

Researchers carried out in-depth interviews with social investment experts, major banks, pension providers, business schools and multinational corporations.

John Canady, Director of Philanthropy at the Charities Aid Foundation, said: “Britain has the potential to become the world leader in social investment. We need to make it clear that our great financial institutions are open for social investment business."

“But despite the rapid growth of social investment over the past decade, the simple idea that investment can yield more than monetary profits is either unknown or regarded as unacceptably risky. There are too many perceived barriers to making the social investment dream a reality. That needs to change, and change now."

“There is a damaging perception that social investment is mired in complexity and even runs contrary to regulatory controls. We need ministers, regulators and leaders of the financial services industry to dispel these myths and help Britain take the lead in this exciting field.”

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