Launch of Cost of Living Fund and consultation response

An update on the £11 million allocated to Access to support charities and social enterprises to better meet the needs of their communities in relation to challenges caused by the rising cost of living.  

Today we have launched the window for social investors to submit expressions of interest to apply for the Cost of Living Social Investment Support Fund here.

This £11m programme, funded by the Dormant Asset Scheme, will enable social investors to offer a broader range of products to support charities and social enterprises in underserved parts of the country to better meet the needs of their communities in relation to challenges caused by the rising cost of living.  

The programme is aimed at supporting charities and social enterprises which have enterprise-based service delivery models. The grant will help them to sustain those enterprise models and where possible scale up their enterprise activity to meet increased demand. Social investors will be able to use the grant to offer new blended finance deals, matching grant to existing loan programmes, to enable more organisations to access the finance they need. They will also be able to provide additional grant to existing investees where it will help to build the resilience of the organisation’s enterprise model and where the organisation is delivering high-impact services to communities with acute needs. Finally social investors will be able to offer enterprise development grants for organisations which have a developed enterprise-based service delivery track record to address acute cost of living challenges in communities but are not able to tolerate any debt repayment.  

Social investors are invited to express interest in the programme by 9am on 12 June 2023. Following consideration of the expressions of interest, some social investors will be invited to make a full application to the programme. 

The investment policy for the programme has been updated from the initial draft which was published as part of an open consultation which concluded in April. We had more than a dozen responses from potential applicants and other stakeholders. The main themes from the consultation and our responses to these themes are outlined below. 

We asked about the types of organisation that would be most in need of support, and how eligibility should be defined 

Respondents were able to clearly articulate the range of cost of living pressures impacting communities and the ways in which charities and social enterprises which they would want to support through the programme are serving those communities.  

As a result of this, we are suggesting that applicants, who will be closer to communities than Access, propose the ways in which they would define cost of living related needs and how they would use this as a basis for making decisions about who should be supported through the programme 

We will expect in applications that this eligibility definition will be very clearly set out and the assessment process related to it to be robust. 

We asked about how the programme can ensure that it reaches under-served communities 

Respondents reinforced the need to build delivery partnerships and presented a range of ideas about how these could be incentivised, which we look forward to exploring in applications. Some respondents highlighted that the proposed mix of products was unlikely to enable reach into the most under-served communities and therefore we have increased flexibility around grant-only products to support enterprise development activity for high-impact organisations in communities with acute need 

We asked about the risk of market displacement and about proposed restrictions for existing Access blended finance programmes 

Some respondents (not just social investors) expressed concern about potential displacement of existing programmes if grant from this fund could not be blended into existing Access programmes. Our original proposal on this was arrived at after careful consideration within the team about seeking to avoid risks of distorting those existing programmes or providing double-subsidy, but we accept the case that preventing the programme being used alongside other existing Access programmes brings its own risks of distortion. Therefore, we will consider applications from social investors who wish to use grant from this programme alongside loans made with existing Access programmes, as long as they can demonstrate how concerns about distortion, additionality and avoiding excessive subsidy can be managed 

We asked about the appetite for types of grant-only products 

While some respondents were very enthusiastic about applying incentives to enterprise development grants, others expressed doubts about the effectiveness of such complicated approaches to address crisis interventions. We have therefore softened the criteria and expectations around how these grants should be made 

There was however clear demand for grant-only products and so we have also increased the expected proportion of the overall fund which will support enterprise development grants 

Some respondents did propose additional products but we did not feel that a sufficiently compelling case was made for these to be included in the final investment policy. 

We asked whether a central deal-by-deal facility would be welcome for social investors not wishing to submit a full application for a significant grant allocation 

There was interest in the idea of a central facility to enable grant to flow to social investors who may only wish to use the programme for a handful of deals. We will therefore explore this opportunity with our grant management partner. Social investors interested in pursuing this opportunity should indicate this in their EoI.  

Thanks to everyone who engaged with the consultation.