Eastside Primetimers has been involved in delivering business support to the social sector for more than a decade including 8 investment readiness projects funded by Access’s Reach Fund. I’m grateful to Access for the invitation to write this blog and share some candid and (hopefully) constructive perspectives about what it’s like.
Understanding the Reach Fund
The Reach Fund is part of a heritage of investment readiness programmes which are geared to support the growth of social investment in the UK, by addressing the accessibility, volume or speed of finance.
Its objectives are therefore similar to predecessor programmes such as Big Potential though its approach is very different.
By doing things differently, the Reach Fund has won plaudits from many camps but it has not been without challenges for infrastructure and support providers like my own.
What’s different about the Reach Fund?
Access’s Reach Fund targets charities and social enterprises which are at a late stage of raising investment and have been qualified by a social investor (“Access Point”).
There is no list of approved providers – as in previous programmes – meaning that organisations have a wider source of possible support.
The support grants are comparatively small reflecting the fact applicant’s needs are narrower and focused on the requirements of their Access Point.
What is the implication for advisors?
The role for advisors is much narrower than we enjoyed on Big Potential but it’s also more straightforward and this creates a lower barrier to entry. This is for three reasons:
- First, there is no requirement for advisors to market the programme (a hidden requirement of Big Potential) because social investors are sourcing opportunities through their pipelines;
- Second, we find less advisory time is required for explaining and proselytising the case for social investment. Previously consultants were frequently asked to assist management and Boards to review the business case for taking on repayable finance. Compare this to the Reach Fund where most organisations will have accepted the necessity for loan finance.
- Third, advisors are not asked to seek the best deal in the market. This is because investment readiness activity is geared to meeting the requirements of sponsoring Access Points. There are exceptions, though, and to the Reach Fund’s credit they have made additional funds available at short notice to support two of our clients when they were turned down by their original Access Points and wanted to engage new investors rapidly.
What I like about the Reach Fund
I’ve warmed to the Reach Fund and there are three things which I particularly like about it:
- Simple Process. The applications are simple and processed quickly. Previous grant application processes have used onerous application forms which have unintentionally created obstacles to raising investment and led to advisors incurring large business development costs. With the Reach Fund, some of our advisory projects have been approved in as little as 7 days. Short development time helps to create a level playing field for all types of advisors.
- Investor-led Projects. We find that our Reach Fund clients have acted with greater engagement and urgency than we’ve usually seen before. I suspect this is due to the projects being investor-led and more focused. Our consultants tell me that they’re also enjoying the work more because the projects have a clear business need and tend to generate funding results.
- New and Stronger Relationships. The programme has placed an emphasis on advisors and investors working together. As a result we have made a concerted effort to strengthen our relationships with investors, which has created other strategic benefits such as a pilot with SASC and Key Fund (backed by Power to Change and the Connect Fund) to test a programme of post investment support.
What does the future hold for social sector advisors?
I speak a lot with other advisors, whether sole traders, consultancy firms, accountancies, local CVS or national infrastructure bodies, and the recurring theme is that the operating environment is as hard as it’s ever been.
For those of us who are active in finance, we’ve seen a hollowing out of organisations set up with a social mission to do just this: Numbers for Good have stopped trading while other firms have continued to adapt their models and move into adjacent areas of interest (Social Finance – advising local authorities on outcomes based financing, Baxendale – advising on primary care; ClearlySo – into impact investing).
This worries me.
The Reach Fund may have opened up the playing field but it’s hard at this stage to judge whether this has been positive or will contribute to greater fragmentation making it harder for charities to find the skills and knowledge they are looking for.
What’s probably more pertinent is whether we’re moving any closer to a thriving ecology of infrastructure and support organisations. But what makes a thriving sector? I’d suggest we should start by asking those involved – because a healthy sector will be one that is able to offer interesting work opportunities, reasonable earnings, professional development, peer support and career progression.
From what I can see social sector infrastructure is at a crucial point and it would be well worth some further enquiry to understand its current health and how it could be strengthened for everybody’s benefit.
Access also works in partnership with Barrow Cadbury Trust to support sector infrastructure organisations directly via the Connect Fund.