We use the term blended finance to refer to a combination grant funding and repayable finance. This may take a wide variety of forms, such as a loan fund which includes grant subsidy to allow the fund manager to make smaller loans and absorb more risk, or unsecured loans which are offered alongside a grant.
Since 2015 Access has been making investments through the pioneering Growth Fund. The Growth Fund is a blended finance programme which uses grant funds from the National Lottery Community Fund and investment capital from Big Society Capital and makes that combination available to organisations who make loans to charities and social enterprises. The Growth Fund is now fully committed with 16 funds in operation, and is closed to new expressions of interest. It will reach peak levels of investment to charities and social enterprises in late 2019/early 2020 and will continue offering investment until 2022. Information about the various funds on offer through Growth Fund is here
From 2018-23 Access’s work on blended finance focuses on three elements:
1. Actively supporting and managing the portfolio of social investors in the Growth Fund who are making loans to charities and social enterprises.
2. Seeking opportunities to supply more grant into blended finance models which help expand the reach of social investment, actively working with a range of partners. This includes the launch later in 2019 of our new Local Access programme of blended finance and enterprise support in around 5 local areas.
3. Leading the case for blended finance and convening the discussions with other potential providers of subsidy around the value of the approach, based on our learning and that of others.
You can more information about the Growth Fund here.
For more details about our ongoing work on blended finance beyond the Growth Fund, visit this page.
Building more blended finance programmes
We have learned a great deal from managing the Growth Fund, and are working on building on this track record to manage a wider portfolio of blended finance programmes.
Over the next seven years we will run our Local Access programme, working closely with Big Society Capital. This will use £10m of dormant accounts money as a grant to blend with repayable investment from Big Society Capital with a focus on supporting communities experiencing disadvantage.
We will build on what we have learned from managing the Growth Fund, including those funds which are focused on a specific geography, and create a flexible blend for social investors. We would ideally like to see Local Access deliver even more patient and long term investment products than have been available from the Growth Fund.
In a similar way to our work on the Growth Fund, we will seek to maximise our learning from this initiative to better build the sector’s knowledge about how blended approaches work, especially in the context of place based investment.
We will continue to work with Government, other foundations and other potential donors to identify opportunities for further blended models which will best meet the sector’s needs and where there might be a meaningful role for Access to play.
Championing the role of blended finance
While there is more that we can learn from building our own portfolio of blended finance programmes, to best achieve our vision we need to encourage greater supply of blended finance for the sector from a wide range of sources.
The Growth Fund has been one of a number of blended approaches, all designed to overcome particular challenges which can better connect the right sort of capital to the charities and social enterprises which need it. Other major initiatives include the Third Sector Loan Fund run by Social and Sustainable Capital, and the Arts Impact Fund, run by NESTA.
Access will build its role as a hub of knowledge and learning about these initiatives, and seek to influence key actors and funders in the social investment market to better understand how blended finance approaches can unlock more capital for the sector in a way which best suits the sectors’ needs around risk, scale and impact. Critical to this will be to understand and evaluate different approaches to blending, the impact of those different approaches on charities and social enterprises and their long term resilience, and how to best use the precious grant subsidy to generate the maximum possible social impact.
Building on our specific approach to learning we will seek to develop clear offers for potential providers of grant support, including Government, Foundations and corporates, for blended funds, and seek to broaden the range of intermediaries who are knowledgeable about managing blended finance.