Session 2021-22
Dormant Assets Bill [HL]
Written evidence submitted by Access – the Foundation for Social Investment (DAB04)
Written evidence to the Dormant Assets Bill Public Bill Committee
About Access – the Foundation for Social Investment
· Designed to ‘disrupt’ the existing social investment market, Access was created in 2015 through a partnership between the Office for Civil Society, the National Lottery Community Fund and Big Society Capital.
· We specialise in funding enterprise development and blended finance programmes in England. Through utilising blended finance approaches (combining grants with loans), we have focussed on increasing the availability of smaller scale unsecured loans for charities and social enterprises who would not otherwise be able to access finance, supporting them to grow their trading income and become more self-reliant.
· This means we support charities and social enterprises most in in need of patient and flexible investment, particularly smaller organisations based in disadvantaged places.
o Access’s £46m Growth Fund targets social investment in the most deprived areas and has invested half of its capital in the most deprived 30% of neighbourhoods.
o Its £9 million Reach Fund is a cost-effective investment readiness programme that makes charities and social enterprises more resilient by supporting organisations that are close to taking on social investment to get investment deals over the line - just under half of all Reach grants went to organisations in the most deprived 30% of neighbourhoods. For every pound spent on the Reach fund, organisations involved were able to generate £7.
· We are one of the four current distributors of dormant assets money. Like the other distributors, we tackle entrenched social challenges through long-term, sustainable investment.
· Access’s programmes are already working across the country, often in areas or communities that may not have benefitted from sustained investment in the past. This includes £10 million funding from Dormant Accounts for Local Access, a place-based blended finance programme and an additional £30 million allocated in May 2020 from Dormant Accounts to support COVID19 recovery.
· An independent review of our work by the Oversight Trust concluded that Access is an ‘effective, agile organisation’ and that the ongoing provision of blended capital and enterprise development through Access is "essential to the charity and social enterprise sector’s impact in the most deprived communities."
Summary
· We are supportive of the Bill overall and agree with its aim to expand the dormant assets scheme and continue to support good causes, via charities and social enterprises.
· Within the expanded pool of funds created by the Bill, it is important that there is continued commitment to providing long-term sustainable investment into communities via social investment support for charities and social enterprises .
· We are calling for the long-term supply of grant for blended finance to ensure that social investment can continue to work for charities and social enterprises in more deprived communities.
· Realistically this is of a scale that needs to come from government and a small proportion of the funds from the expanded Dormant Assets scheme could provide this, building on the work done to date to grow and sustain the social investment market.
· We are supportive of Community Wealth Fund proposals as an additional mechanism for channelling funds to local communities – while detail around how a fund or funds might work still needs to be worked through, early-stage community capacity building is vitally important and likely to complement our approaches to supporting enterprise activity in those communities.
· However, we believe that funding decisions should be kept as broad as possible for the purposes of the Bill and that due consideration should be given to all potential schemes during the consultation phase that will follow the legislation.
Commentary on provisions of Bill
Part 1: The Dormant Assets Scheme, Clause 1: The Dormant Assets Scheme: Overview
Supporting communities in need via charities and social enterprises
1. Charities and social enterprises can struggle to find the finance they need to sustain or grow their impact. Too often it is the groups most in need of investment who find it hardest to access it. Typically, the type of finance that is suitable for most charities and social enterprises has not been readily available either because there was too much risk, or the size of the investment was too small.
2. Blended finance is helping to put the power of private capital to work on a broad range of issues ranging from employment and skills to health inequalities and social mobility in areas it would not normally reach. It is a tried and tested mechanism for getting finance to the places and communities where it is needed most, particularly smaller organisations based in disadvantaged places.
3. To date, the £46 million Growth Fund (managed by Access, funded primarily by The National Lottery Community Fund and Big Society Capital and delivered by our social investor partners) has provided more than 500 organisations with finance, at an average investment size of £67,000. This is much closer to the pattern of demand from the sector for smaller amounts of finance than the wider social investment market (an SEUK survey found that social enterprises were asking for a median amount of 50k).
o A quarter of all investments under the £46 million Growth Fund have been made into the most deprived 10% of neighbourhoods (IMD 1): four times that of the wider social investment market.
o Half of all Growth fund investments have been in the most deprived 30% of neighbourhoods (IMD 1-3).
4. Growth Fund investees typically have half the turnover and one-tenth of the assets of other recipients of social impact investment, demonstrating the vital role that blended finance plays in the market, and the long-term need for subsidy to support it. That gap has been getting wider. In 2019, it was one-fifth of the turnover and one-fifteenth of the net assets typical of the social investment market.
5. Importantly this isn’t just about money. It’s about power. By encouraging investment into local organisations rather than just providing grants it is putting control back into the hands of local communities to solve problems for themselves.
6. In addition, our £9 million Reach Fund is a cost-effective investment readiness programme that makes charities and social enterprises more resilient by supporting organisations that are close to taking on social investment to get investment deals over the line - just under half of all Reach grants went to organisations in the most deprived 30% of neighbourhoods. For every pound spent on the Reach fund, organisations involved were able to generate £7.
How Access has utilised Dormant Assets money to date
7. Access is one of the four current distributors of dormant assets money. T his includes £10 million funding from Dormant Accounts for Local Access, a place-based blended finance programme based in Bradford; Bristol; Gainsborough; Greater Manchester (Bolton, Oldham, Stockport and Wigan); Hartlepool, Redcar & Cleveland; and Southwark in London.
8. In addition to £30 million allocated in May 2020 from Dormant Accounts to support COVID19 recovery.
o Access’s £6 million emergency lending programme gave 70 grants to enable organisations to take on loans during COVID that wouldn’t have otherwise been viable, leveraging £15.5m of investment into charities and social enterprises.
o We are now building a £22 million programme aimed at creating more sources of patient and flexible repayable finance for charities and social enterprises during the recovery phase of the pandemic.
Part 2: Other Provisions, Clause 29: Distribution of dormant assets money for meeting English expenditure
Committing to long-term sustainable investment into communities via social investment
9. The UK social investment market has increased eight-fold in a decade to more than £6 billion invested in charities and social enterprises. This means that it is growing on average at 25% a year – more than twice as fast as mainstream capital markets.
10. The Growth Fund (managed by Access, funded primarily by TNLCF and BSC and delivered by intermediaries) has supported charities and social enterprises in some of our most deprived communities, four times that of the wider social investment market. Overall, the programme contributed around a fifth of the loans made by social investors over the last few years.
11. We are calling for the long-term supply of grant for blended finance to ensure that social investment can continue to work for charities and social enterprises in more deprived communities.
12. Within the expanded pool of funds created by the Bill, it is important that there is continued commitment to providing long-term sustainable investment into communities via social investment support for charities and social enterprises so that we can provide the long-term capital needed to address the very deep-seated challenges that many communities face.
13. Realistically this is of a scale which probably needs to come from government and a small proportion of the funds from the expanded Dormant Assets scheme could provide this, building on the work done to date to grow and sustain the social investment market.
Keeping funding decisions as broad as possible for the purposes of the Bill
14. There are a range of worthy causes that could benefit from the expanded scheme.
15. We support the government’s decision to remove the provisions in the Bill relating to community wealth funds (subsections (2) and (4) of Clause 29, that were added to the Bill at Report stage in the Lords).
16. It is our view that decisions on funding for the expanded scheme should be kept as broad as possible for the purposes of the bill, with the subsequent consultation period providing the appropriate forum for debate around where these funds are allocated.
For further information please contact:
Chloe Stables, Director of Partnerships, Access – chloe.stables@access-si.org.uk
Case studies
Intraquest Community CIC (based in Oldham but works across the UK) is a counselling service in Greater Manchester. Set up by a former addict, Karen Keates, they train professionals, such as social workers and the police and offer accessible and affordable therapy directly to children, young people and adults. Key Fund invested a £16,600 loan and £3,400 grant from its Northern Impact Fund to help working capital costs and grow turnover and enabling them to move to a more sustainable business model.
Romney Resource Centre (Romney Marsh, Kent) provides training to help young people to close skill gaps, build confidence and enhance their employability. This includes supporting young people into traineeships, apprenticeships, employment and further education through targeted learning, mentoring, work skills and work placements. They secured a blended loan and grant totalling £75k (£57,750 loan and £17,250 grant) from Kent Community Foundation to support their two-year business plan. This enabled them to move past financial stabilisation and into growth.
Hull FC Community Foundation delivers projects under the four key principles - Participation, Education, Health and Social Inclusion. Their programmes raise spirits and unite different ages, sexes, ethnicities and socio-economic groups in a shared passion and the Hull FC Foundation looks to improve the lives of over 40,000 people every single year. Sporting Capital provided an investment of £50,000 to help the Foundation to expand the services they offer in schools.
SharpFutures, a social enterprise based in Newton Heath Manchester support s young people into employment in the creative digital sector. They received a £150k investment (a £45k grant with a £105k loan) for the refurbishment of flexible office, production and event space at affordable prices. They are n ow home to over 60 digital entrepreneurs and production companies specialising in digital content production, digital media and TV and film production.
Homebaked is a co-operative bakery and community land trust based opposite Liverpool FC’s Anfield stadium. They successfully applied for a grant of £15,500 and loan of £45,500 from Livv Investment under the Growth Fund. This has been spent on a dedicated catering unit and specialised equipment which enabled them to ramp up production to meet demand, creat e new positions and free up space in the kitchens for more educational courses, including classes for local school children.
Leigh Spinners Mill near Wigan is a social enterprise based in a Grade II* listed double cotton spinning mill. They received £100k through the Growth Fund (a 15k grant and an 85k loan) to develop the main mill and creat e jobs – the site now has 20 commercial tenants including a café, various sports facilities including a gym and indoor bowls, a Jiu - Jitsu Dojo, a music school, a local community - led cinema and a creative hub hosting local artists. This initial arrangement has laid the foundation for more investment – with the development of a Community Sport, Health and Wellbeing facility on the site of the second mill.
Street League operates in 14 regions across the UK with the sport for employment programmes running in 38 local communities. The 10-12-week long programmes support unemployed 16–24-year-olds to learn the key skills, gain the necessary qualifications and work experience to move into a sustainable job or further training. Sporting Capital provided an investment of £150,000 which will allow additional resources and capabilities to be brought into the organisation to enable Street League to work with more young people and grow specifically the wellbeing services they offer.
January 2022