Equality impact investing – reflecting on progress in 2021

A year ago I blogged about our progress on strengthening our equality impact including on equity, on diversity and inclusion across Access’s work. 12 months on and we have made progress in a number of areas, but we know there is much more to do.  

This blog reflects on the last 12 months. As last year this update is broadly structured around the different equality impact investment strategies outlined in the EII report. A second blog will look at our plans going forwards.  

In June the Oversight Trust, our parent organisation, published an independent review of Access. The findings of the review included specific recognition of Access’s role in supporting the social investment sector’s journey towards greater reach to all charities and social enterprises, and in improving its own diversity. The review panel highlighted our work in supporting, and participating in major initiatives such as the Equality Impact Investing Project and the Diversity Forum, and the steps we have already taken to improve our practice. They also suggested that Access redouble our efforts. In our response to the review we outlined how we will take these recommendations forward.  

During the summer we partnered with Power to Change and Social Investment Business on a report looking at the data across the three organisations on the extent to which our funding is serving black and minoritized communities. This analysis highlighted a number of historic challenges in how well our respective data tracked protected characteristics of the leadership and beneficiaries of the organisations who receive our funding. Generally, data quality is improving for all of us and greater standardisation will help measure progress more clearly going forwards. The data in the report has subsequently formed the foundation of the Social Economy Data Lab’s Diversity Data Dashboard.  

Reaching charities and social enterprises with diverse leadership 

There have been two significant developments in our programmes over the last year aimed at broadening the reach of social investment. 

Firstly the £22m Flexible Finance for the Recovery programme, set up in late 2020 to support social investors to be able to offer more patient and flexible finance to support charities and social enterprises rebuild their trading base in the recovery from the pandemic.  

The programme has a specific objective to expand the reach of social investment to organisations run by people from underserved communities. This includes, as we know from the work with SIB and Power to Change, those from black and minoritized communities as well as other protected groups including people with disabilities or women. Expanding reach in this way is one of the three criteria against which all proposals are assessed. Proposals have been rejected because they did not demonstrate a sufficiently strong commitment in this area.  

Five out of the six funds so far approved have explicit targets for reach into organisations led by people from black and minoritised communities or women. We will report on the programme’s overall reach in our dashboards as soon as the data starts to come through.  

The second development was the launch of a dedicated strand of our Enterprise Development Programme for charities and social enterprises led by, and in many cases also working for, people from black and minoritized communities, in partnership with The Ubele Initiative and their national strategic alliance. The programme will support around 50 organisations through a number of cohorts over a three year period. So far 12 organisations have been approved to join the first cohort, with a total of £355k in enterprise grants agreed. As with all the sectors in the EDP programme, building a more comprehensive understanding of the dominant business models which are emerging through the programme should help many more organisations, including those working in the wider equalities sector, beyond just those receiving advice, training and financial support from the programme.  

We have been reviewing data from other programmes to understand how different products with different criteria are reaching different parts of the charity and social enterprise sector.  

In response to the short-term impact of COVID on the sector, we worked with five intermediaries on a programme to offer blended grants alongside emergency loans, where social investment could be an important tool but where the capital need was greater than the organisation’s ability to repay. 

£5.6m of grant was made available to 71 organisations, leveraging £15.6m in loans which would not otherwise have been viable. Of this total, across the whole portfolio:  

  • £2.61m of grants (47.9%) were deployed to Women-led organisations through 34 awards  
  • £580k of grants (10.6%) were deployed to Disability-led organisations through 5 awards  
  • £150k of grants (2.7%) were deployed to LGBT-Led organisations through 2 awards  
  • £140k of grants (2.6%) were deployed to BAME-Led organisations through 3 awards  

The under-representation of BAME led organisations is addressed in detail in the SIB/Access/Power to Change report, as the largest fund utilising grants via the programme was the Resilience and Recovery Loan Fund delivered by SIB. More can be seen on the RRLF Applicant Profile DashboardGiven many BAME led organisations are smaller there were some particular challenges with eligibility relating to the use of the CBILS guarantee. SIB have been analysing this challenge in detail and have some specific plans for how it can be addressed. We are in active discussion with them about how we can help support that initiative through the Flexible Finance programme.  

On the Reach Fund we are seeing some challenges in reaching different communities. We are responding in the design of the third phase of the programme which has just launched. The recent evalaution of the programme highlighted that women-led charities and social enterprises, and those led by people from minority groups are less likely to be successful in securing grants from the programme. Those organisations were just as likely as others to raise investment following a Reach Fund grant, but typically those investments tended to be smaller.  

To mitigate this we are putting in place some specific mechanisms in the newly launched third phase of the programme to further incentivise the social investors, known as Access Points on the Reach Fund, to broaden the reach of the programme. Regular data about the diversity of leadership of grantees at a portfolio will be shared among the Access Points to drive up performance and future decision about budget allocations will partly be based on the performance of the Access Points in this area.  

Investing to achieve equality outcomes 

Access began the Equality strand of the EDP in 2019. Equally Ours lead on the programme and work with a pan-equality approach, which enables the programme to support organisations working with different groups as well as those working across groups and intersectionally. In delivering EDP, EO works in partnership with issue-specific national equality infrastructure organisations who are part of the Equality EDP’s steering group to ensure the programme reaches organisations working across the equality sector.  

The inclusion of the Equality strand of EDP was in large part the result of the Equality Impact Investing report of 2019 which identified that charities and social enterprises focused on equality and human rights outcomes were particularly underserved by the social investment market. One reason for this is the embryonic nature of some of the enterprise models in the equality sector, a challenge EDP is well designed to address.   

In terms of the enterprise models being developed, the top three types of trading activity being pursued are education/training/advice provision, retail (inc. charity shop models) and horticulture/produce.  These three types account for around 80% of the support from the programme to date, with the first alone accounting for around 55%. However, although there is a big skew towards knowledge-based models, the customer base appears to be going beyond the public sector to include other markets. We are also seeing a number of other models which were less expected including for example housing, wellbeing and catering enterprises.  

Given the focus of many of the investments which will be made through the Flexible Finance programme our insight into these business models will grow further.  

Equally Ours are also playing a vital role in supporting the partnership as a whole to improve ED&I processes and outcomes, through initiatives such as producing an easy-read explanation of the programme, leading training for programme partners, changing the format of decision-making panels to address issues of unconscious bias, improving data collection, and reviewing recruitment processes for the cohorts.  

So far 37 Equality organisations have been accepted into the programme. Of these  

  • 12 organisations are BAME- Led  
  • 6 organisations are considered as Disability-led  
  • 7 organisations are LGBT-Led  
  • 17 applications are Women-Led  

Equity, diversity and inclusion within social investment 

We are continuing to support a number of significant sector-wide initiatives which are playing a major role in advancing the ED&I agenda within social investment, and promoting the wider field of equality impact investing. This support is chiefly delivered via the Connect Fund, delivered by Barrow Cadbury Trust. 

Supporting ED&I has been a funding theme of the Connect Fund since its inception in 2017 and the programme has made 16 awards totalling more than £600k to this end.  

Two key national programmes have been supported in multiple years: 

  • The Diversity Forum, hosted by Social Investment Business (SIB) and comprising a range of social investors, is a discussion and action forum to drive improved social investor diversity and inclusion practice.   
  • The Equality Impact Investing Project was hosted originally by The Dartington Trust but has also now migrated to be hosted by SIB.  It has worked to develop the field of equality impact investing, develop specific strategies for its advancement and increase their use.  

ED&I continues to be a core theme of the Connect Fund under its recently refreshed funding priorities 

In terms of Access’s own practice, a major focus over the last year has been on continuing to increase the diversity of our governance structures.  

At the end of last year, we recruited three individuals to join our investment committee for the Flexible Finance programme, who brought expertise in how social investment providers can best embed equity, diversity and inclusion practice in their work and how they can best remove barriers to access for charities and social enterprises led by and/or serving minority groups. Unfortunately, during the course of the year one of these had to step away owing to other commitments. Bonnie Chiu and Bayo Adelaja have played a very significant role in shaping the Flexible Finance programme and in providing pro-active and practical support to social investors through the process and we are very grateful to them for their work. 

We are also recruiting to our Board following a vacancy which opened up during the year. Applications closed in December. We are seeking individuals who offer a skills and extensive experience in one or both of the following areas: 

  • Deep knowledge and insight of supporting charities and social enterprises led by and/or serving black and minoritised communities; 
  • Direct experience as a social entrepreneur or leader of a trading charity.

I will blog again shortly on our plans for the year ahead.