Key Fund tries to live by our guiding principle of “right money, right time”. We must of course honour our commitments to and the requirements of our funders, but we always try to reflect need and build flexibility in the design and delivery of funds.
From time to time we have the chance to trial new patient and flexible funding approaches, such as underwriting community share issues in the early 2000s, trialling zero interest and repayment via social impact models with EU funds, using convertible loan notes to fund participants in the Dotforge tech for good programme and participating in five social impact bonds.
These activities are great learning processes and really help to develop our thinking. The main influences on investment practice though, are our annual client survey and consulting with investment managers. For example, client feedback via our investment team, informed our Flexible Finance fund, which makes funds available, whilst managing the cost of borrowing.
However, our capacity to invest in different ways is hugely influenced by the sources of our capital. We have been fortunate to have worked with a range of engaged funders and we are always seeking to build the relationships that enable us to respond to our client’s business models.
A great example is Flexible Finance, which is a revolving credit facility, that works a little like an overdraft. It provides an agreed credit limit that can be drawn against and repaid flexibly over a five year period, ideal for funding contracts paid in arrears, capital build projects and new trading activities. Interest is paid on the balance outstanding.
Recently we have also worked with colleagues at Local Access Bradford and District and Amanah Advisors to establish a zero interest loan, which is Sharia compliant, but available to all clients as an option.
Support from Access: The Foundation for Social Investment has been the vital component in building these most recent examples. In addition to the zero interest offer of the Sharia facility, it has also enabled us to offer an important choice in our blended funds. Clients can select an investment with a 6.5% interest rate and a blended grant at 40% of the loan value, or a lower interest rate with a smaller proportion of grant.
The final shape of any offer always reflects a mix of client, staff and funder input, it’s how we have worked for 25 years and it’s how we will continue to operate. It is always good to discuss what is happening in the communities we work with and consider how we respond in the design of our funds. I’m quite keen on a coffee too, so happy to talk.