This week, organisations across our portfolio have been trying to adapt their plans around the latest update from government on easing the coronavirus lockdown.
Constant adaptation has been a feature for most organisations over the last few months. In their Lockdown Diaries, our partner, Catch-22 recently shared some of their experiences adapting their services for vulnerable groups. We worked with Catch-22 to establish Capacity – The Public Service Lab in Liverpool, that aims to improve how public services are delivered.
To support charities and social enterprises adapting through this crisis, we set out our priorities eight weeks ago and want to keep you updated on progress:
Sharing information
The furlough scheme has been one of the most significant sources of enterprise support, so the news this week that it has been extended to October is significant. From the start of August, furloughed workers will be able to return part-time and companies will also be asked to contribute to the scheme. The level of that expected contribution will be crucial for the feasibility of restarting many organisations in our portfolio. A significant remaining challenge is the current restriction on furloughed staff volunteering in their own charities and social enterprises, even where significant social benefit exists. Further details on scheme changes are expected at the end of May.
We keep our information hub for charities and social enterprises and social investors updated with new information. We have been developing pages on how organisations in the UK are adapting and also on global activity. This week the Global Impact Investing Network (GIIN) launched the Response, Recovery and Resilience Investment Coalition for sharing learning and opportunities. We will be joining the coalition as a member of GIIN and will share relevant information through our channels. Also this week, Social Enterprise UK has launched a useful online forum for social enterprises who have questions on adapting their business through COVID-19.
Adapting
Our drawn social impact portfolio roughly splits 40/40/20 between lending, infrastructure (social property and community renewables) and equity and outcomes funding – supporting more than 1,200 organisations. Overall, smaller organisations in our loan portfolio have been most affected by the impact of COVID-19, but there have been implications for all, including infrastructure investments.
Our community renewable funds aim to bring financial, social and environmental benefits to deprived communities. We support two main programmes, Leapfrog Finance and Community Owned Renewable Energy (CORE), through Environmental Finance. Our community renewable investments to date are projected to generate over £32 million of community benefit payments, those are local unrestricted grants. Revenue in this area has been resilient so far in this crisis, allowing in some cases increased payments to communities. Even here though, our managers have been working through adaption challenges, for example, on delayed construction activity.
Community asset investing has been an important part of our work since inception. In the last few weeks one of our first investments, Resonance’s innovative Community Share Underwriting Fund, has fully paid back delivering its targeted impact and financial returns. The fund supported over 14 projects and helped unlock over £30 million of other investment. Resonance is now working to develop a successor community asset fund.
New Funding
For many organisations in this crisis, grants are needed most of all, especially where there has been significant loss of revenue alongside increased demand for services. Following weeks of campaigning for parity for charity from our partners, we are delighted to see that the new government guidance for the Local Authority Discretionary Grants Fund prioritises funding for organisations that get charitable rate relief. Previously, this had only been given to organisations that got small business rate relief. Grants could be £25,000; £10,000; or any amount up to £10,000.
In early April, government announced a £750 million grant programme. Of this, £200 million was allocated to hospices, some of which has started to reach organisations in our portfolio. We know other parts of the programme are being worked on at pace, with NCVO reminding this week of the need in this environment for speed, simplicity and transparency.
For organisations where loans are appropriate, the launch of Bounce Back Loan Scheme (BBLS) last week has been a big help for many organisations in our portfolio seeking smaller loans. 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 (BBB) to try and expand its reach.
For larger amounts, the Resilience and Recovery Loan Fund we helped set up with Social Investment Business is now open for applications. This offers loans that are interest and fee free for the first year, with no penalties for early repayment, using the Coronavirus Business Interruption Loan Scheme (CBILS). It is being delivered in partnership with Big Issue Invest, Charity Bank and Social and Sustainable Capital. For both the BBLS and CBILS schemes, the 50% trading requirement has been removed for registered charities so it is now available to many more charities who could benefit.
In late April, the Government announced £1 billion of funding for start-ups, which should help support many early stage organisations in our portfolio. An important part of this is a planned Future Fund to match equity investments. There have been many questions on how this will be structured, with ongoing work at the British Business Bank – we expect final details to be confirmed shortly.
As the impact of the pandemic becomes clearer on our society and economy as well as our health, the need to adapt takes a sharper focus. Many charities and social enterprises have already shown extraordinary change leadership, alongside those who support, fund and invest in them. All the signs are that this ability to continue evolving and innovating will even more important in the face of challenges ahead.
