Backing resilience and relationships in the third sector

19 August 2020

This article was originally published as part of the 'Meet the Manager' blog series on the Big Society Capital website.

 

Four-and-a-half months into the new normal and the best thing to have come out of lockdown is the realisation that we have invested in some incredibly resilient, determined charities.

As Social and Sustainable Capital (SASC) responded to impending lockdown and prepared to do our duty by working from home, our borrowers galvanised themselves for a once-in-a-lifetime event. As the nation stockpiled tinned goods, our borrowers were working out how to carry on providing support for their vulnerable clients without endangering the health of their own families at home. What is more, for some of our investees, there came an additional surge in demand for their services caused by lockdown conditions: Hull Women’s Network saw a 47% increase in applications for help from women fleeing domestic violence.

After more than a decade of austerity, UK charities have learnt to be resilient, they’ve had to. But it means that at times of crisis, they show their true colours. Perhaps what that really means is that, as a social investor, we have had our role fully confirmed – we are here to support these outstanding organisations in a way that helps them do their best work.

At the beginning of lockdown, we questioned how we too could step up to the challenge. We went through the obvious checklist – see how our borrowers are coping; work out how we could offer flexibility and support with our loans; make sure that investees were aware of all financial support packages available from Government and elsewhere. Then we started to test ourselves by looking at what more we as an organisation could do.

First off, we jumped at the chance of playing a part in a sector response to the impact of COVID-19. Previous blogs have touched on the Resilience and Recovery Loan Fund (RRLF) and the work we did, but SASC was delighted to be a delivery partner on this venture. RRLF was a great move for the social investment world – an opportunity to show that we too could adapt to a fast-moving situation and craft something of value. While no SASC borrowers took a loan from the fund, it was great to talk to some new charities and social enterprises and craft a solution to meet their needs.

As lockdown progressed, colleagues at SASC became aware of the plight of the ‘Everyone In’ cohort. This is the group of rough sleepers who were brought in off the streets and given emergency accommodation in hotels and hostels. Initially 5,000, and soon a total of 15,000, homeless people were helped.

While the speed of this response was impressive, in truth, the ‘Everyone In’ cohort represents the failure of society to address the rise in street homelessness over the last few years. So, when the Government said they wouldn’t let them go back to the streets, we felt the same.

We had already been talking to civil servants in the Department for Housing, Community and Local Government (MHCLG) about our housing fund, Social and Sustainable Housing (SASH), and our belief that it offers a solid opportunity to grow the amount of social housing, and particularly supported housing in the UK. We recognised that the ‘Everyone In’ cohort were prime candidates for SASH housing and set about making sure that they could access it.

Conversations with Big Society Capital and Local Authorities are leading to an investor-coordinated effort to mobilise additional capital that will help house the ‘Everyone In’ cohort.

At the same time, our borrowers had also heard the rallying cry to help the ‘Everyone In’ cohort. Many of our borrowers were talking directly to their local councils and offering to house people in their local areas. To do this, many needed more housing. While SASH has only been in action for 15 months, our investees recognised the unique flexibility that SASH gives them to buy the right type of house, in the right location for their clients. They were clear that they wanted us to increase their loans so they could step up and help.

But it wasn’t just our borrowers who recognised the value of SASH. Many charities in our pipeline were also talking to their councils about supporting the ‘Everyone In’ group and wanted the flexibility that was offered by SASH. A SASH loan gives a charity control and ownership of properties that they select and buy, it allows the houses to be used in the manner best suited to individual clients, and SASH investors absorb many of the traditional risks that mortgages or fixed leases pose to charities running supported housing. Now half a dozen charities are being lined up to be signed off for investment to help the ‘Everyone In’ cohort and we are talking to local authorities across the country to see if they have local partners we can support.

Which takes us back to resilience. SASC’s due diligence process looks at many things, but crucial, in our mind, is the cohesion and diligence of the staff and board of each charity; as well as their relationship with local councils and commissioning services. These are the markers of resilience: good governance, strong social purpose, and a pivotal role in their communities.

From SASC’s perspective, we can’t help every charity or social enterprise, but we can try and pick the outstanding ones and support them to grow sustainably. When COVID-19 struck, our portfolio stepped up to the challenge. We raise our caps to our investees, local heroes all.

 

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