6 years ago a small pilot was set up with a pro-active Home Office as the investor to support community-led enterprises. The aim was to make the money work differently using patient capital and grants and make it available to experienced practitioners.
The Government came up with £2million of loan finance in 2003. The pilot programme was set up to prove that investing in community organisations will increase their sustainability and continue to provide unique, holistic regeneration services where local needs dictate they are required. 6 years later 160 organisations have benefited from receiving support from expert individuals who have guided them with strategic advice. 140 business development grants have been awarded and now the fund model has been adopted by across government departments.
Before ACF there was no other dedicated loan fund for the community and voluntary sector and was the first social investment fund of its kind.
Findings
After 3 years the ACF received:
- 4000 enquiries
- 200 applications
- 37 fund allocations
- All funds are allocated and there is a waiting list
- Three types of businesses were invested in; managed workspace, services and production
- Funds were a mix of grant and loan
- Repayment holidays were also available
Impact three years on for applicants to the fund:
- 62% increase in income
- 171% in asset expansion
- 57% improved reserves
- Significant advances in organisational development
These organisations did better than similar sized organisations that did not access the fund.
The evaluators found that the ability to take on loan finance is closely related to the confidence of organisations to generate capital and revenue.
Economic turbulence
50% of the ACF portfolio experienced turbulence of some kind due to two main factors. Area-based funding has decreased and because anchors can’t move they have struggled to replace this funding. Another consequence is the change in commissioning practices means that discretionary grants disappeared so organisations found it extremely hard to fund their core activities. They responded by delivering contracts instead.
Two major trends occurred in the restructure of services like the Registered Social Landlords (RSLs) and Arms Length Management Organisations (ALMOs) and the change in practices by commissioning bodies. These changes systematically closed down on smaller based organisations including the ACF portfolio, they have found themselves competing, just as organisations outside the portfolio.
Measuring social impact
The authors found that a definitive measurement of social benefits still proved elusive. Three different types were used; the balanced score card, SROI and a social schedule. All of these were found to be problematic.
Policy Recommendations[1]
The report outlines a set of recommendations for both the government and ACF.
Evaluation recommends the Government to:
·Work with experts to address emerging issues in the capital market
·Secure better access to sustainable revenue streams for multi-purpose community based organisations
·A mis-match of revenue streams will limit community anchors to fulfil their strategic role in the community and will be obliged to take on long-term funding for short-term contracts.
·DCGL to secure adequate funding
Evaluation recommends the ACF to:
- Review its position in the marketplace
- Develop a strategy to manage the long-term loan relationships (3 yr loan with 10 yr repayment)
- Consolidate its support programme
- Explore alternative models for business growth such as collaboration for expertise advice such as architectural etc.
- Develop a common approach to measuring social benefit
Link to the full report
http://www.adventurecapitalfund.org.uk/images/stories/files/reports/acf_finalreport_july%202009.pdf
[1]Investing in thriving communities: the final external evaluation report on the Adventure Capital Fund, Stephen Thake & Sanjiv Lingayah, (London Metropolitan University, 2009)
