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This section sets out the governance structure around Big Society Capital.

Prime Minister David Cameron pledged shortly after the election of the Coalition Government in May 2010 to establish a Big Society Bank using “every penny of the English dormant bank and building society account money ... alongside private sector investment … [to] make available hundreds of millions of pounds of new finance to some of our most dynamic social organisations”.

Big Society Capital was launched in April 2012 as a private sector company, independent of Government, with a governance structure involving the Big Society Trust as the guardian of the “mission” of the organisation.

The Big Society Trust was established concurrently as the majority shareholder of Big Society Capital and it has subsequently become the sole Member of Access - the Foundation for Social Investment (Access) to fulfil a similar governance role for that organisation.

Dormant Accounts

The Dormant Bank and Building Society Accounts Act 2008 enabled banks and building societies to voluntarily hand over monies unclaimed for over 15 years left in dormant accounts to a reclaim fund. The Reclaim Fund Ltd was established by Co-operative Financial Services (later re-named Co-operative Banking Group (CBG)) in response to a request from HM Treasury. It was authorised by the Financial Services Authority (now Financial Conduct Authority (FCA)) and became fully operational in March 2011 as a not-for profit subsidiary of CBG.

The Reclaim Fund’s purpose is to distribute surplus monies for the benefit of good causes (as directed by the Dormant Accounts Act) and always hold sufficient funds to meet reclaims in perpetuity. While the Reclaim Fund is a wholly-owned subsidiary of CBG it operates under a separate regulatory licence, operates independently on an administrative basis and has a separate Board of Directors.

The Reclaim Fund transfers surplus funds to the Big Lottery Fund for distribution. 

The Big Lottery Fund

The Big Lottery Fund apportions the money it receives from the Reclaim Fund between the home countries of the United Kingdom on the basis of the Barnett Formula (a standard weighting used for such apportionment by Government). The Big Lottery Fund forwards the English portion as directed by the secreatry of State of the Department for Digital, Culture, media and Sport (DCMS).

Big Society Capital’s owners: The Big Society Trust and the Shareholding Banks

The Big Society Trust uses the monies it receives to buy “A” shares of Big Society Capital. The “B” shares are purchased by the shareholder banks (Barclays, Lloyds, RBS and HSBC). The Big Society Trust’s investment is currently £380 million (66% of the total capital) with each bank contributing £50 million. Over time, it is expected that the Big Society Trust’s shareholding will grow to £425 million (DCMS announcement in January 2018) and the banks will collectively hold £200 million.

The Big Society Trust and banks can vote at shareholder meetings with votes in proportion to their shareholding. However, the banks have each agreed to cap their voting rights at 5% of the overall voting rights, meaning that the Big Society Trust is entitled to 80% of the total voting rights.

The object of the Big Society Trust, defined in its Articles, is to help promote and develop social investment and the social investment market in the UK, overseeing Big Society Capital to keep it “true to its object” and by being the sole Member of Access – the Foundation for Social Investment.

The Big Society Trust has four Board meetings a year at which the CEO of Big Society Capital and the CEO of Access each presents an update on their organisation’s activities and strategic issues are discussed. The Board of the Big Society Trust is not involved in investment decisions or operational issues concerning either organisation.

The Big Society Trust has high level governance powers, including the ability to amend the Articles of Big Society Capital and Access and also remove their Directors.

Reflecting this strategic remit, the Board of the Big Society Trust represents a balance of social and financial experience and comprises business and social sector leaders and, ex-officio, the CEOs of sector representative bodies, a nominee of the Cabinet Office and the Chairs of Big Society Capital and Access.

The Articles of the Big Society Trust ensure that decisions are made independently of Government.

Big Society Capital

Big Society Capital’s object is to act as a social investment wholesaler and generally to promote the development of the social investment marketplace in the UK. It also seeks to achieve and maintain financial sustainability over the longer term.

It is authorised and regulated by the Financial Conduct Authority (FCA).

The composition of the Big Society Capital Board reflects its purpose and includes directors with financial and/or social sector experience. The Board comprises non-executive directors (including one who is nominated by the shareholding banks) and the CEO of Big Society Capital.

In certain circumstances the shareholding banks have the right to request a meeting with the Chair and senior management of Big Society Capital to discuss its performance.

Board Committees

Big Society Capital’s Board has two Committees comprising non-executive Board and external members with specific expertise:

  • The Audit, Risk and Compliance Committee, responsible for overseeing management processes and other arrangements to ensure the effectiveness of systems and controls, including risk management.
  • The Nominations and Remuneration Committee, responsible for making recommendations concerning the appointment of directors (including the CEO) and setting levels of remuneration.

Operational Committees

Big Society Capital has established three other operational committees:

Executive Committee

Chaired by the CEO, responsible for the day-to-day running of Big Society Capital. The members of the Executive Committee are Big Society Capital’s CEO, Chief Financial Officer, Chief Investment Officer, Deputy Chief Invetsment Officer, Head of Strategy and Market Development, Head of Origination and Head of Engagement. 

Investment Committee

Chaired by the CEO or the designated Deputy Chair, responsible for making investments and for the performance of Big Society Capital’s portfolio of investments, and reporting its activity to the board.  All investments made over £10 million also require approval by the Board.

The Committee normally meets weekly on a Wednesday morning to discuss potential investments and pipeline.

More details here.

Valuation Committee 

Chaired by the CFO (who is not a member of the Investment Committee), responsible for determining valuations and assessing investment performance, including social impact. This includes identifying key risks and issues within Big Society Capital’s investment portfolio. The Chair of the Committee has the ability to go straight to the Chair of the Audit Committee with any concerns and the Audit Committee and company auditors are invited to observe meetings of the valuation Committee.

Advisory Board

The CEO may establish an Advisory Board to advise on aspects of Big Society Capital’s strategy or activities. The Advisory Board is made up of individuals with specific interest and involvement in social investment, including prominent practitioners from the sector. The Advisory Board is a consultative committee with no decision making powers. Its membership is approved by the Big Society Capital Board.

More details here.