04/04/2012 10:36 BST | Updated 26/04/2012 13:04 BST

Big Society Capital Could Be Too Little Too Late For Beleaguered Charity Sector

A financial institution launched by David Cameron aimed at boosting the funds of charities may come as too little too late for the sector, already hit by billions of pounds worth of cuts, voluntary organisations have warned.

Wednesday's announcement of Big Society Capital and its £600m spending power was hailed by the prime minister as "financial muscle" for social enterprise to help "small charities".

The fund is intended to help grow the social investment sector, to "make it easier for charities, social enterprises and community groups to access affordable finance."

But one charity told the Huffington Post the funding would make no difference to their financial plight, saying they needed help with "running costs" rather than money to grow their organisation.

Gillian Morris, chief executive of My Voice London, which provides mentors to deprived young people, told The Huffington Post UK they are unsure whether their funding would even "keep going in the next year", and that a boost to social investment would make "no difference ".

"Capital funding doesn't count towards rent, for example, to us it will make no difference at all," she said.

A cabinet office spokesperson said the fund would help social enterprises and small charities grow which would be "in addition to, not instead" of traditional funding.

“We recognise that social investment is not for everyone, and many organisations will still be seeking to raise finance through philanthropy or grants. Social investment will be a third pillar of finance to the sector, bringing in new sources of finance in addition to donations and state support."


But Karl Wilding, head of policy at the National Council for Voluntary Organisations (NCVO) said it had to be seen in the context of charities facing an estimated £1.2bn cuts per year until 2015.

"There is a short term context of organisation facing some quite severe cuts. Our latest estimate based on OBR forecasts is charities are facing £1.2bn cuts a year, over the period of the spending review [until 2015] and 70,000 jobs were lost in 2011," he told The Huffington Post UK.

"Any new resources coming into the sector when there's a triple whammy of cuts, rising needs, and rising inflation is a good thing.

"Where I'm cautious about it is that loan finance and other social investment type approaches such as equity are not for everybody. Big society bank is about social investment and in that sense it won't help some services. Lots of organisations are quite risk averse when it comes to those tools."

Ralph Michelle, head of policy at the Association of Chief Executives of Voluntary Organisations said it was important to help the "under-capitalised" voluntary sector in Britain.

"That is a problem we and the voluntary sector have been talking about for years. The difficulty now is making sure the context that voluntary organisations operate in is one that allows them to thrive and allows big society capital and other social investors to have the confidence to invest in them."


The cuts come as a result on a squeeze of local and national government funding and experts say they are particularly affecting youth services and advisory services.

The Citizens Advice Bureau said they recorded a 7% drop in the number of people they could help compared to the previous financial year following cuts to their funding. And some services have faced major cutbacks. Platform 51, a charity which helps women and girls has had to scale back its programmes for teenage parents. The results of the government's cuts to the legal aid budget were described by shadow minister for the big society Gareth Thomas as "staggering".


Gillian Morris, chief executive of My Voice London, said the funding squeeze had real impacts.

"For the first time ever we have a waiting list of children who are in urgent and disturbing circumstances," she said.

Morris said one child, Stephen, who her charity were unable to help, needed services for his violent behaviour and had just gone into care: "It's his third or fourth care placement. His mum is in prison and he has no contact with his Dad.

"Quite soon care is going to end and he's going to have to be financially independent. Because he's vulnerable he hasn't learnt a lot of the strategies and skills and understanding we acquire in the family. He doesn't understand that school matters, he needs to attend and he needs to attend on time and do his work.

"He doesn't understand how to communicate effectively with people. He needs to develop that understanding and practice how to deal with different people, if he is in trouble he needs to run-through what would happen. He has anger issues and is likely to hit out at teachers.

"He needs to have someone in his head, which is what mentors can provide, saying calm down, count to 10 and what is your best strategy for achieving something positive out of this problem. He's one of the children that we can't help."