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Responsible Finance

Responsible Finance

Member: Society Free
Since: 12.10.2016
We are the voice of the Responsible Finance industry

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Responsible Finance: Social enterprises need access to finance to help rebalance the UK economy

27.02.2020 Share

In the UK 100,000 social enterprises report access to finance is a barrier to their growth and development. In response, last week Lord Victor Adebowale launched a new Commission on Social Investment to look at how we can improve access to finance for social enterprises. Social enterprises are key to the UK economy. They work in the most deprived areas to tackle deprivation and inequality, and responsible finance providers are a vital source of funding for them.

A recent report from the thinktank New Philanthropy Capital found that in deprived areas – and in particular many of the UK’s ‘left behind’ places – there is a dearth of charities, which are disproportionately concentrated in England’s most affluent areas. According to the author, due to the benefits that charities bring to the place where they are based this exacerbates ‘geographical inequality in social capital and infrastructure’[1].

On the other hand, social enterprises are disproportionately located in more deprived areas. One in five are based in areas that fall into the most deprived quintile according to the Index of Multiple Deprivation, with a further quarter are in the second most deprived quintile[2]. They create value in these areas which is shared with everyone, whilst also being commercially resilient. Despite this, many social enterprises across the UK state that access to appropriate finance is their biggest barrier to their growth and sustainability.

Responsible finance providers offer finance and support to social enterprises across the UK which employ those who are disadvantaged, champion environmental sustainability, and reinvest their profits to deliver their mission. As social enterprises themselves, responsible finance providers understand their needs and can therefore tailor their products and services accordingly. They assess loan applications based on the social impact that the enterprise will create, offering finance to start-up and grow socially and environmentally impactful businesses.

One example of this is Doncaster Refurnish. It is part of a community’s continuing efforts to pull itself together in the aftermath of pit closures, and responsible finance provider the Key Fund has supported its journey along the way.

Doncaster Refurnish collects, restores and sells furniture to low income families, and works to alleviate poverty, as well as benefit the environment. It offers employment and training to those on the margins of their local community, and rehabilitation and integration opportunities for prisoners due for release from Hatfield Prison, as well as placements for young offenders. It also offers handyman and support services to those in need, and a number of charities in the area.

“With every Key Fund investment we’ve received we’ve grown and done something bigger. It’s enabled us to spread the risk a bit in financial terms and take on a challenge. Every time we’ve grown we’ve recruited more staff. Currently we’re at 58 staff; 98% of whom were unemployed before they joined us. Turnover is £1.3m,” CEO Andy said.

Refurnish is looking to raise substantial finance to purchase a large retail outlet in a highly disadvantaged area of Doncaster. “On top of that, we have projects working with schools where people with special educational needs or disabilities come in and work with us on work experience placements or to increase social interaction.” Constantly evolving to meet local need, they recently set up a women’s group, with a focus on anxiety issues. They make crafts from the furniture, and clothing for charity, boosting their confidence and sense of well-being. On average, Refurnish makes 13,500 items of bulky household waste collections every year. “It’s hard to put any meaning on the numbers,” Andy said. “For me personally it’s about the people and seeing their personal journey as they strive to move forward.” Andy has said Key Fund listens with ‘their hearts as well as their ears’.

In 2019, the responsible finance industry as a whole lent £93 million to 390 social enterprises. Despite the growth of the responsible finance industry it still faces barriers, such as a lack of awareness and access to capital to on-lend. The government has a renewed impetus to work with responsible finance providers as it shifts towards a focus on sustainable development, and we would like to ask for its support by:

Ensuring responsible finance providers have access to long-term and sustainable funding

This will ensure the sector has the capacity and capital to expand its reach and impact. The creation of a dedicated fund would allow a strong and capitalised responsible finance industry to increasingly build wealth, help move people out of poverty and reduce inequality of opportunity in communities.

Replacing access to European Union funding and facilities through the new UK Shared Prosperity Fund

Since 1999, responsible finance providers have received over £70 million of EU funding. It is vital that EU facilities which incentivise commercial investment into the responsible finance sector, namely ERDF, are replaced in full by the UK Shared Prosperity Fund.

Updating Community Investment Tax Relief to ensure it remains fit for purpose

Tax reliefs and guarantee schemes are tools widely utilised by the responsible finance industry to leverage commercial investment, thus increasing our impact. These tools need to be kept competitive to maximise social and economic return.

[1] Corry, D (2020) Where are England’s charities? Available:
[2] Capitalism in Crisis? State of Social Enterprise Survey 2019: