Friday 18 February 2011

Could The Big Society Bank Change Our Communities?

One of the ongoing criticisms of the Big Society is that it lacks definition. As mentioned in a previous post I’m cautiously optimistic about the philosophy itself, but I thought it might be interesting to show one way in which the Big Society could have a genuinely big impact on funding within the community. This is sketched out in back-of-the-envelope figures so don’t take me to task on the numbers in this post! It's just a way of showing that at least in theory there are changes afoot.

Oh.
For Trafford Housing Trust there is roughly £700,000 of funding each year that goes through our Community Panels - which are about local people making decisions for their neighbourhoods. If we look at the Big Society Bank we could start to imagine what size loan this would produce if instead of thinking of that money as a single yearly amount, we looked at it as being the repayment of interest and principal for a loan. Suddenly, rather than having a single yearly figure of £700,000 then you’ve got a five or six yearly lump sum of £7-10 million. 

What could we achieve with that level of Big Society funding?

Take an example of a community centre. One that's tired and needing money spending on it and then once refurbished, likely to run at a loss for some time (indeed if ever) before it is able to support itself from paid-for activity. If you had a system where you used part of our Community budgets to repay a loan that would do up (or possibly even build the centre itself) and it was partly used to run the community centre in the right way on a diminishing level of subsidy against an agreed business plan, then you’ve got a very different model for use of that money than just putting up some railings or making some car parking spaces.
Could the Big Society Bank go one step further?

There are two other factors that make this switch in funding interesting. The first is if you factor in social impact bonds. For the uninitiated this is a form of payment by results stream. It might be that you say that you want to start a community project and the impact of it will reduce a set social issue by x%. That improvement will save the government £y million per year, so they promise me that money if I achieve it. When I’ve got that promised income stream I can then use it to raise money from a bank. However, if I don’t achieve that result then I still have to make the payments on the bond. Add in the proceeds from a social impact bond and our initial £700,000 of funding per year has now become a very significant sum of money indeed.  

Then we factor in another element based on the simple truth that success goes to success. If we wanted to attract philanthropic money, or go to large companies and get access to their Corporate Social Responsibility money then these are sources of funding that like to see success. Naturally, they’re not going to want to throw money after projects that fail or don’t make much impact. Like it or not – "iconic" projects are one of the things that they like. Getting something off the ground with large capital investment is intriguing because it enables you to go to philanthropists and CSR money and say look what we’ve achieved – with your money we could double this, or replicate it somewhere else – suddenly you’ve got even more community centres.

So how does this relate to the real world? What could you build? Sale West is a great example. There’s a community centre there that’s been fragmented into at least four and – I’ve had two meetings already on this and I still don’t truly understand how it’s set up – potentially five or six management regimes - so the building isn’t managed effectively. When the Sale West estate was built there wasn’t a church and the church there uses the centre on a Sunday. They would like to build a church and their view is that instead of it being a community centre that the church is able to use, that there should be a church that is also community centre with the two spaces both working for each other. Now that means doing something quite ambitious to the site, something which would require significant funding, something perhaps that the Big Society Bank could do. How's that for definition?

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