This paper offers a constructive critique of a recent account, in this journal, of the place of compassion as a virtue within social policy. The critique suggests that the ‘compassion thesis’ collapses into an account of duty rather than virtue, and that compassion as a virtue can only be exercised by individuals, and not by institutions. The paper goes on to suggest an alternative account of the relationship between social policy institutions and the virtue of compassion. It develops a broadly Humean account of ‘sympathy’ triggered by proximity to distress. In this alternative account, social policy is used to create the background conditions in which individuals are moved, and able, to exercise the virtues of sympathy and compassion. Special attention is paid to housing and mixed communities policy as a means of creating the social proximity that may underpin a welfare culture of understanding rather than blame.