Councils, universities, businesses – new partnerships are starting to form with a shared interest in stimulating their local social economy by providing vital finance to the charities and social enterprises which provide key services to their communities and create jobs and wealth.

The Northamptonshire Impact Fund, which is currently in development, is pioneering this form of collaboration. Once established, it will offer affordable loans to charities and social enterprises, financed by £1m from the Social Investment Bureau with a further £2m committed in principle by public and private investors.

We have developed it in partnership with the University of Northampton and UnLtd.
It will be the UK's second Local Impact Fund, following the launch of the £2m Liverpool City Region Impact Fund in January.

Just as in Northamptonshire, the fund sees a partnership between national and local partners. In this case, Social Enterprise North West, which has detailed knowledge of the impact that organisations are making in their communities and can bring this to bear on investment decisions.

The Social Investment Bureau has developed the Local Impact Fund model as a means of accessing EU structural funds and using them to attract matching funding from national and local investors with a shared interest in developing the local social economy and transforming local public services.

They are intended to provide business support and affordable, unsecured loans of up to £250,000 to charities and social enterprises, helping them to grow, create new jobs and scale up the impact they make in their communities.

Nine further cities and regions, from Devon to Cumbria, have already announced plans to set up their own Local Impact Funds.

We believe that 15 to 20 local areas will want to launch a Local Impact Fund by 2016, and we expect each of these funds to initially be between £5m and £10m.

We believe Local Impact Funds could deliver £100m to local charities and social enterprises within a couple of years if local investors come forward and work together.

Local Enterprise Partnerships, local authorities, universities and local businesses have already demonstrated a real appetite for the Local Impact Fund model, and we believe it will appeal to other institutions such as Clinical Commissioning Groups and housing associations.

It gives them the opportunity to work alongside each other to ensure both the finance and support get to the local organisations creating the most impact and addressing the most pressing needs in their community.

Local Impact Funds will make these investors' money work hard, because once loans are repaid, the money can be reinvested in new organisations to help them scale up their activities.

Charities and social enterprises are a powerful and growing economic force, providing jobs and creating wealth for communities – often those which need it the most.

Nearly 38% work in the 20% most deprived communities in the UK, compared with only 12% of small businesses.

Around the country the sector is worth £55bn, supporting more than two million jobs, and 82% of organisations reinvest their profits locally.

We know that across the country these organisations are ambitious to do more, but lack of finance is preventing them from realising their full potential to transform their communities.

This is the number one barrier to the growth and sustainability of social enterprises, according to a recent survey by Social Enterprise UK. Our own research has shown unmet demand of over £350m of investment from the sector.

That is why we have developed Local Impact Funds, to meet the demand for social investment by providing affordable finance on a scale which isn't easily available elsewhere.

We are keen to launch the next cohort of Local Impact Funds and we would like to hear from ambitious organisations that are keen to invest and grow their own local social economy.

Jonathan Jenkins is chief executive officer of the Social Investment Bureau (SIB)