A Social Investment Task Force in Britain

"Recognising the scale of the challenge of securing private sector investment in disadvantaged areas and in social enterprises, the Chancellor of the Exchequer Gordon Brown commissioned the Social Investment Task Force. The force was led by one of Britain's leading venture capitalists, Ronald Cohen, and in October, the Task Force presented its report, entitled Enterprising Communities. It sets out a five-point programme of action to encourage more private sector investment in disadvantaged areas.

First, a new Community Investment Tax Credit is proposed to encourage private investment to be channelled through Community Development Financial Institutions to both not-for-profit and profit seeking enterprises in under-invested communities. We believe that a tax incentive for community investment could help to bring more investment and expertise to disadvantaged communities.

The second recommendation is for a new community development venture fund, a matched funding partnership between government on the one hand and the venture capital industry, entrepreneurs, institutional investors and banks, on the other. The Chancellor has already committed £10 million in matched funding for this purpose.

In its third recommendation, the Task Force calls for disclosure by individual commercial banks of their lending activities to businesses in under invested communities and the creation of a rating system to reward excellent performance.

The fourth recommendation is for greater flexibility and encouragement for charitable trusts and foundations to invest in community development initiatives. The Charity Commission will issue a range of further guidance next year on how charities can provide equity finance and loans, as well as grants to further their charitable objectives and on the important role that charities can play in community development finance.

Finally, the Task Force attached a high value to the contribution of community development financial institutions and believe they are right to have done so. This is a growing sector, with a few long established institutions like the Prince's Trust, alongside newer, smaller scale and locally based institutions".

Extracted from the statement of Stephen Timms MP, Financial Secretary, UK,
at the Conference on Micro-credit & Microenterprise for Employment, Paris, 11 December, 2000.