The Mayor’s Fund for London is toying with the idea of creating a £100m charity bond for London, potentially injecting new life into the social investment market for small charities.
Fund chief executive Matthew Patten last month told civilsociety.co.uk that the Mayor’s Fund for London has a responsibility to use its position and resource to take leadership in key areas of charity funding across all of London.
“We’re working at creating a £100m charity bond for London and the purse of that would be very much focused on specific outcomes in terms of young Londoners, but the beneficiaries of that fund would not be the Mayor’s Fund for London,” he said. “We would see that as being any not-for-profit organisation which is making a difference in that space.”
Patten said that if the Mayor’s Fund for London was to create the bond, it would remove the need for smaller organisations to deal with the complexities involved with launching a social finance product.
“And by doing something that is really of scale – as opposed to a £5m or £10m bond – we think we will shine a spotlight on this area of funding, and hopefully inspire people to think that there is something here,” he said.
The bond is not yet developed, but the Mayor’s Fund for London is having conversations about setting it up with key contacts in the City and beyond. While emphasising that the bond is not being ‘announced’, but rather that the concept is being worked on, Patten said that the charity might expect to launch it in the second half of 2014. At present, the organisation is looking at how it might combine the charity bond and social impact bond models.
The Fund chief executive said that payment-by-results models represent a “huge opportunity” for many charities, but the complexity and cost of engaging in social finance meant that funding instruments like social bonds are completely out of reach for small organisations.
Bond numbers: 'low and disappointing'
He added that the number of bonds which have actually been launched since talk about social finance began has been relatively low and disappointing.
“To me, it’s a bit like sex: everybody’s talking about it, not many people are doing it and those that are doing it are perhaps not doing it quite as well as they’d like to be doing it,” he said.
Patten was speaking to civilsociety.co.uk as part of a wider interview about the Mayor’s Fund for London funding priorities.
Social investment and charity bonds have been on the sector’s radar for more than a decade, but have attracted a particular interest over the last five years with the launch of the Peterborough scoial impact bond, which aimed to cut prisoner reoffending, and individual charity efforts like Scope's £20m bond and Mencap's £10m bond.
Big Society Capital, funded by hundreds of millions of pounds of dormant accounts money, is designed to help stimulate a nascent social investment market in the UK, which is recognised as a world leader in this space.
