Seven weeks since the UK lockdown began, we are getting a clearer picture of how charities and social enterprises are adapting to the crisis and the funding needs they will have.
The majority of organisations in our portfolio have maintained revenue and operations in this crisis, often with significant adaption in service delivery. A significant minority though have seen large drops in revenue, in many cases where they are reliant on footfall.
Our partner, the Social Investment Business, has been using open banking data to map the scale of drops in consumer spending and identify funding need. A recent update in Tortoise media is showing year on year drops of 70% in some towns. An example of those affected is the Jubilee Pool in Penzance, which we funded through our programme matching community crowdfunding for Social Investment Tax Relief.
For organisations like this, reliant on local consumer spending, the ability to furlough staff has often been crucial to survival. Our conversations are increasingly on the expected tapering of the furloughing programme in July, and the challenges of resuming operations alongside that.
Seven weeks ago, we set out our three priorities in this crisis and want to keep you updated on progress:
Our COVID-19 pages for social investors and fund managers and Good Finance’s for charities and social enterprises are regularly updated with sources of funding and support – they have now had 40,000 unique views in the last six weeks.
As funding requirements become clearer to organisations, we’re aiming to build a richer picture on repayable investment needs - if you’re an organisation seeking repayable finance, please share more details with us here. Ultimately, our ability to meet significant funding needs depends on the interest of proposals to other investors, if you are an investor interested in opportunities, please share with us here.
Our sister organisation, Access – The Foundation for Social Investment, moved early to amend its programmes, providing capital and interest relief to many of the smaller 400+ organisations across the Growth Fund - which is supported by the National Lottery Community Fund and Big Society Capital. Many of the charities and social enterprises in this programme rely on footfall and have seen significant revenue drops. This week we had a roundtable with the 14 social investors across the programme. It was clear a diverse mix of funding will be needed to restart organisations in their portfolios, with some repayable funding and business support, but often grants needed most of all.
For smaller organisations where loans are appropriate, the arrival of bounce back loans this week has been a significant help. These are loans of up to £50,000 (or 25% of turnover) provided through mainstream banks. A 100% government guarantee enables them to be fast-tracked without credit checks, with 69,000 applications being approved in the first day. We are aware of some challenges, for example organisations who have their business bank accounts with smaller banks. If you have not been able to access the programme, please let us know as we will be working with the British Business Bank to try and expand its reach.
For larger loans, the Resilience and Recovery Loan Fund we helped set up with Social Investment Business is now open for applications. This is offering loans through the Coronavirus Business Interruption Loan Scheme 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. The 50% trading requirement has been removed for registered charities which will help open the Scheme to many more organisations.
Thanks to new government schemes and the work of many of our partners, there are now more available routes for emergency liquidity. Nevertheless, we know that many funding needs are not being met by current programmes and we are continuing to work with others to bring in other types of funding. For example, we are considering the role for social investment in helping to house the 5,400 formerly homeless exiting current hotel arrangements and are exploring the need for a digital transformation fund to help service redesign. If you are interested in working with us on any of these or other projects, do get in touch.