The new Big Society bank, which is capitalised with £600m, is expected to open for business and has been created by the government to lend money to charities and community groups.
Sir Ronald Cohen, chairman of
Big Society Capital
, explained that it "gives an incentive to a social organisation to achieve a social performance and give a financial return to an investor".
He gave the examples of Peterborough prison and the St Giles Trust which, he said, would provide savings to the state which will be returned to investors because it would, in these cases, prevent re-offending of criminals.
Sir Ronald said that the important thing is that "there are pools of capital that are prepared to accept a combination of financial and social returns".
"We are the market builder" trying to build a whole host of social investment organisations which can be funded so they can help social organisations with funding advice.
He agreed that the scale is enormous but insisted that it was real and likened it to the achievements of business entrepreneurs over the last 30 years.
He said that the bank is aiming a below the market return but want it to be sustainable in the long term.
"We are at watershed where we can not ignore social issues any longer," he said, adding that "charities have done what they can, governments have done what they can, now it is the time of social investment and social entrepreneurs".
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