What is social finance? An interview with The Key Fund
The Prosper North programme is made possible thanks to funding by the National Lottery Heritage Fund and through our partnership with the Key Fund, Bates Wells, and Social Investment Business. These partnerships have been crucial to the programme’s aim to help organisations achieve a position whereby they can access and use funding from diverse sources, not just grants from local authorities, the Arts Council, the Heritage Fund or trusts and foundations. One of these diverse sources of funding could be social finance.
So, what is social finance? We sat down with Adrian Bean, Lead Investment Manager at The Key Fund, to find out more about social finance, from its birth during 90s Yorkshire, to how social finance could be used to support sector recovery from COVID-19.
Can you please tell us a bit about Key Fund and the work that you do?
Our story began in South Yorkshire in 1999. Hit by the collapse of coal and steel industries, we wanted to find new ways of breathing life back into our neighbourhoods – to support new enterprises, create jobs and bolster these once proud communities. Key Fund was formed by a group of likeminded social entrepreneurs and philanthropists. Our central mission is to provide finance – flexible loans and grant/loan packages – to help community and social enterprises to start-up, become sustainable, or grow. It’s not just about the money. It’s also about providing the right kind of support to help our investees have the best possible chance of success. We invest in community and social enterprises who have traditionally been excluded; turned down by mainstream banks and building societies. Particularly those in disadvantaged areas. Key Fund believes in the power of people to find solutions to the challenges facing their communities. Our mission is to remove barriers to finance. Our investees have one crucial thing in common – the ambition to build and strengthen local communities.
What does managing the Northern Cultural Regeneration Fund entail?
The Northern Cultural Regeneration Fund (NCRF) provides up to £150k financial support – with up to one third as grant for capital spending. This is aimed at creative businesses of all shapes and sizes that deliver social impact. The fund has been secured from the Department of Digital, Culture, Media and Sport. We are responsible for identifying clients that will benefit from this type of funding and for guiding them through the application process, helping them with 121 support all the way until they receive the funding and beyond.
As an organisation that prioritises social value, how would you describe the role that heritage organisations play in the local communities you work with?
Heritage organisations benefit not only the heritage assets they look after, but also the wider community bringing in economic and societal benefits, attracting tourism, increasing employment and volunteering opportunities, whilst positively contributing to the economy, our wellbeing and local communities. They celebrate their local area/place, increasing feelings of belonging, identity and pride.
The arts sector is traditionally more risk averse and has been a hesitant adopter of social investment. What would you say to those working within the sector about the impacts of alternative finance schemes?
There are many ways of raising finance available and social investment is one of them. Grants are often hard to obtain, with numerous organisations applying for what may be limited or small amounts resulting in the funds often being oversubscribed. Social investment is a way of raising funds which can be used as unrestricted monies, at very competitive interest rates, often with a grant attached as is the case with the Northern Cultural Regeneration Fund. Such funding may not be right for every organisation but Key Funds’ ethos is about providing the right money at the right time to organisations. Exploring social investment helps ensure that organisations make informed choices rather than merely just repeating what they have done in the past.
How can arts and cultural leaders prepare for the longer-term challenges and opportunities which may emerge in the post-COVID-19 economic landscape?
Grants may be harder to acquire post-COVID-19 than they have been in the past given the high level of grant support that has been made available to help organisations survive COVID-19. They should consider all future opportunities to generate sustainable and diverse income streams to avoid being totally grant dependent, exploring different options of funding them. As is the case in the retail sector, those organisations that don’t look forward with an open mind may well struggle in the future. There is no reason not to chat with funders to find out what may be available which will ultimately help with decision making.
Prosper North is a free programme with a mix of free, tailored 1:1 business support, workshops, webinars and meetups designed to enable cultural heritage organisations in the North of England to increase income and impact, become more resilient businesses and explore social investment.
You can find out more about the Prosper North programme here.