Week 7 - never more needed

Across our portfolio we see organisations facing great challenges in this crisis, but also hear incredible stories of how many are adapting to continue to deliver on their mission. Some are directly helping with the response; others are changing their models to continue to deliver services during social distancing.

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Written by

Jeremy Rogers, Chief Investment Officer

There are no easy answers to the questions we’re all asking about what lies ahead, but we are increasingly seeing organisations preparing for some social distancing to be in place for at least the rest of the year.

We are going to use these blogs more and more to share stories of how organisations are adapting, as well as to provide updates on the priorities we set out six weeks ago:

Sharing Information

As well as our social investor hub and COVID-19 resource hub on Good Finance, we have been coming together with managers in different areas across our portfolio. For example, there is a weekly conference call organised by Social Investment Business for social lenders - these have been crucial to help share approaches and learning. Some of our managers are also coming together on shared challenges, such as sourcing Personal Protective Equipment for their portfolio companies. Our outcomes contract managers have been working with local authorities and the Life Chances Fund to redesign services, more on their activities below. If you’d like to be involved in any future collaborations, do get in touch.

Adapting

We targeted capital and interest rate holidays as the quickest way we could provide organisations affected by the crisis with cashflow relief. These have now been granted to more than 500 organisations across our portfolios. While this is over a third of our portfolio by number, it represents around 10% of our investments by value, highlighting how smaller organisations are being disproportionately affected by the crisis.

Our portfolio comprises a mix of equity, social property, debt, outcomes financing and community renewables. In outcomes financing we support organisations delivering services to the most vulnerable in areas such as homelessness and children services. With outcomes contracts, investors provide capital for providers upfront and are only paid back by government for the results that are achieved. This gives providers more freedom to innovate and improve their service around delivering better outcomes for beneficiaries. Our main investments are through Bridges, Big Issue Invest and Social Finance who have between them invested in over 70 contracts to date, working with over 100 social sector organisations to deliver a collective outcomes value of over £250 million.

Social distancing has meant a radical redesign in weeks of many outcomes based service delivery models in our portfolio. For example, Positive Families Partnerships is a family therapy service that works to prevent young people being taken in to care. They have switched to running all sessions remotely, providing families with the required technology if needed. West London Zone, which works with disadvantaged children, has been providing physical supplies and virtual support so all the children it works with can benefit from home learning programmes. We Are With You (formerly Addaction) supports those with substance misuse issues. They have moved sessions to virtual and are finding that this has improved delivery, such that they will be rolling this into all delivery in the future.


New Funding

Most organisations in our portfolio are seeking a mix of funding to trade through this crisis. Often grants and other support programmes such as the furloughing scheme are needed most of all. There have been some fantastic responses from grantmakers, from the Arts Council Emergency Response Funds to Esmée Fairbairn making 540 simple unrestricted grants to existing grantees and this morning's Power to Change £12 million of emergency support grants.

This week has also seen the announcement by the chancellor of new Bounce Back Loans for amounts up to £50,000 or 25% of turnover. These have been modeled on similar schemes in Europe which deliver fast 100% government guaranteed loans through the main banking system. This has the potential to be the most effective source of loans for smaller organisations, many of which were not being well-served by existing schemes. More details on the scheme are due on Monday, 4 May and we will be working with the British Business Bank to ensure this scheme is working equally for smaller impact-driven organisations.

Our Community Investment Enterprise Facility has been making smaller loans through Community Development Financial Institutions (CDFIs) in disadvantaged areas. The fund had adjusted to making emergency loans available through the Coronavirus Business Loan Interruption Scheme (CBILS), and in the last few weeks it has lent £6 million to 120 organisations. We expect to adapt all our funds as new schemes appear; following the launch of Bounce Back Loans, it is expected the funds here will now focus on loans from £50,000 up to £150,000.

For slightly larger loans for charities and social enterprises we have been developing the Resilience and Recovery Loan Fund with Social Investment Business, with applications opening this week. The fund offers loans of £100,000 - £500,000 for charities and social enterprises using CBILS, where loans are interest and fee free for the first year. It is being delivered in partnership with Big Issue Invest, Charity Bank and Social and Sustainable Capital. This week, following discussions with the British Business Bank, the 50% trading requirement has been removed for registered charities which will help open the scheme to many more organisations.


Certain things become clearer in crises, such as tackling any significant social challenge will always require collaboration across the public, private and social sectors. We have found this trilingual approach has been crucial to our most significant investments from Resonance’s Homelessness Funds to Fair by Design tackling the poverty premium.

In this crisis there is a gap emerging between the need for the social sector alongside the public and private sectors, and the support available to charities and social enterprises. The social sector will be needed even more as we rebuild in the months ahead. We will continue to add our voice to the efforts of many others to make the case for the greater role charities and social enterprises can be playing in our national response to this crisis. They are #NeverMoreNeeded.

Jeremy Rogers

Jeremy Rogers

Chief Investment Officer
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