When Key Fund launched in 1999, it was solely a grant giving organisation, established to distribute big European structural funds, in a way that could support grassroots activity in disadvantaged communities in South Yorkshire.
Back then this approach was new, but the people involved already had an eye to the future, and so within two years they had started to think about how Key Fund could support these same organisations to become independent and resilient through trading. As a result, in 2002 we launched another pioneering fund, using a blend of grant and loan together to enable organisations to develop or grow trading activity.
True to this founding spirit of testing and learning, in the last 24 years, we have developed many other different approaches to delivering our mission of ‘right money, right time’ and supporting the sector; from patient quasi-equity, to loans with repayment linked to the achievement of social impact, to convertible loan notes.
Whilst many things have changed in the intervening years, through different funding cycles, economic downturns and pandemics, the demand for blended finance does seem to have endured, as evidenced by the success of the Northern Impact Fund.
The first Northern Impact Fund ran from 2016 to 2022 and supported 189 individual investments, totalling £9.1m.
We’ve now secured the final pieces of finance for the £8.45m Northern Impact Fund 2, which is open until 2027 to organisations working in the north and midlands.
The reason for the success of these funds, I believe, is because they are so straightforward and clear. The Northern Impact Fund 2 offers a loan with a significant grant (up to 30% of the total) alongside from the very start. Applicants know how much will be repayable and when, so they can plan with certainty. The grant is directed to pay or offset the cost of an organisation’s social impact during initial growth. The loan enables them to grow their trading activity to a point where profits can cover the impact costs going forward. As such, it can be transformative, offering a step change for enterprises in a supportive way.
The Northern Impact Fund 2 echoes back to our beginnings, and that first blended fund offer in 2002, developed to support enterprises in a meaningful, sustainable way. It is in a way, the most ‘Key Fundy’ of our products. It embodies what Key Fund is about; we do still try new things, but we also remain committed to applying what works, simply and without fuss or hype.
It’s important we get the investment into the right hands – those doing the most impactful work, often against huge odds. And it’s important too that it’s more than money. It’s about practical support, an understanding ear and solid advice; we walk alongside our clients
An example of one of the recipients of the Northern Impact Fund 1 is Veterans at Ease, a charity set up by Garreth Murrell, who had served ten years in the armed forces, with tours of Bosnia and Northern Ireland, before joining the police. PTSD caught up with him.
After seeking support, he discovered NLP therapies, and it changed his life. Unavailable on the NHS, it became his mission to make it available to other veterans.
His charity faced huge demand for its counselling services, but struggled to secure funding and faced closure. They decided to establish a charity shop trading arm to generate income, and also provide volunteering, training, and employment opportunities to veterans.
The Northern Impact Fund 1 provided the initial grant and loan investment to open the first shop in Whitley Bay in 2018. The shops pay for the charity’s rent and running costs. Key Fund gave a further £100k investment in December 2021 to expand. It now has six shops in the North East, Tees Valley, and Norfolk.
The Northern Impact Fund 2 supports organisations, like Veterans at Ease, to grow and amplify their impact. And in turn, those organisations throw lifelines – often to those most in need, and often in our most disadvantaged communities.
The new government has announced its five missions: for clean energy, economic growth, health, opportunity for all, and safer communities. Our clients are positioned at the front line, chipping away, transforming one life at a time. They are remarkable people, creating jobs, bolstering local economies, while putting a much-needed arm around other people, and our planet. They need support though and that’s why we are so delighted to have finalised this fund.
The huge success of the Northern Impact Fund is reflected by the number of investors who have all contributed to create a second round of £8.45m funds.
We are grateful to Access – the Foundation for Social Investment, Better Society Capital, Barrow Cadbury Trust, The Places Foundation, the Regional Growth Fund and Unity Trust Bank, Joseph Rowntree Trust, and the Mercers’ Charitable Foundation, who have all contributed to make this second round a reality.
With their support we look forward to supporting even more organisations to thrive with the Northern Impact Fund 2.
Matt Smith CBE, CEO