Growth Fund Evaluation: Providing Finance That Charities and Social Enterprises Need

Introduction

This research explains how the Growth Fund’s subsidy model works, analysing its impact on social investors using the blended finance model. It also makes recommendations for how future subsidy programmes could be designed. The programme combines grants and loans to help charities and social enterprises access social investment. The research aims to understand how the subsidy model worked and what lessons it offers for funders and social investors.

Findings

The research found that subsidy played an important role in enabling small social investment loans.

The research found that:

• blending grants with loans helped make small loans viable

• subsidy reduced financial risk for social investors

• grant funding helped cover delivery costs and potential loan losses

• the approach increased access to social investment for charities and social enterprises

• blended finance helped organisations build confidence in using repayable finance

The subsidy model made it easier for social investors to offer smaller loans and support organisations that might otherwise struggle to access finance.