Volunteers, community groups and social enterprises are to benefit from a new £11.5m North East regional social investment fund.
The fund will be backed by £4.5m from Big Society Capital, with £3m – in principle – coming from the Northern Rock Foundation.
A social investment company will also be set up to encourage more social investment in the region and to oversee the running of the fund, supported by a further £1.5m contribution from the charity.
Alastair Balls, chairman of Northern Rock Foundation, said the new fund was an opportunity to bring about major changes in how voluntary and community groups were funded.
“The North East Social Investment Company, and its first social investment fund, are being set up to provide an innovative regional strategic solution to developing the market for social investment in the North East and reducing disadvantage, deprivation and social need in north east communities,” he said.
“This is an opportunity to create a seismic shift in the funding landscape of the voluntary, community and social enterprise sector (VCSE) in the region.”
Subject to completion of negotiations between Big Society Capital and Northern Rock Foundation, the new company will be set up early in the New Year and the fund will be open for lending by mid-2014.
“We are delighted to be working in partnership with Northern Rock Foundation to set up an independent, sustainable and long lasting social investment facility that will catalyse enterprise, innovation and growth in the voluntary, community and social enterprise sector in the North East,” said chief executive of Big Society Capital, Nick O’Donohoe.
The proposal for the fund has been led by Northern Rock Foundation and developed with the help of accountants PwC and regional expert Peter Deans, and with support from the North East Local Enterprise Partnership, Voluntary Organisations’ Network North East and social investors and voluntary organisations working in the region.
Jeremy Middleton, chair of the investment panel for the LEP said “We were pleased to help fund the initial research for the social investment fund and after lengthy joint work it is rewarding to see it come to fruition.
“It is also great to secure significant national financial support for a North East fund which, of its kind, leads the UK.
“It is a great direction for Northern Rock Foundation to take and we applaud its leadership of a scheme which has the strength to have real lasting impact across the North East.”