Over the past 25 years, Key Fund has invested £64 million and unlocked a further £57 million. What have been the pivotal moments or decisions that enabled such sustained impact?
The people who founded Key Fund in 1999 were focused on rebuilding South Yorkshire’s communities, which were reeling from the collapse of the coal and steel industries.
They understood the challenges that these areas faced and foresaw the role that social enterprises – a fairly new idea at the turn of the millennium – could play in helping to rebuild places and communities, by creating social and economic opportunities.
Originally set up as a grant maker, Key Fund understood that funding had to evolve in order to enable these organisations to rebuild South Yorkshire communities in a sustainable way.
They pioneered the use of blended grant funding and loans to support the growth of trading activity, enabling the delivery of impact for the long-term.
This approach has been fundamental to the growth of Key Fund and our sustained impact – and is a central part of the way in which we continue to work across the North and Midlands. They truly were pioneers.
How have the needs and challenges of social enterprises in the North and Midlands evolved since Key Fund’s inception, and how have you adapted your funding approach?
The collapse of the coal and steel industries had left communities across South Yorkshire – where Key Fund was founded – in need of a seismic economic shift. The need back then was about regeneration and giving local people the tools to rebuild through small grants.
But over the years, the challenges facing social enterprises have shifted. What we’ve seen in the North and Midlands is that the need has gone from simple startup support to something more complex – including surviving shocks like COVID, and tackling deep-rooted inequalities.
So, we’ve evolved. Our funding approach is no longer one-size-fits-all. Thanks to the support of our funders, we offer a range of products to support organisations at different stages in their journey. And we don’t just hand over the money and walk away. We provide them with support throughout their journey with us, and often beyond that, building lasting relationships.
While navigating the multiple operational and societal changes of the last 25 years, we’ve never strayed from our mission: getting the right money into the right hands at the right time, so that people can lead the change in their own communities.
What criteria do you use today to evaluate which organisations receive grants or loans, and how do you balance financial viability with social mission?
It’s science mixed with art and there really is no simple answer.
However, a core eligibility point for Key Fund is that we only ever invest in organisations that are tangibly and directly delivering social impact.
Of course we have a structured way of assessing proposals, but its really about working alongside people to understand their business, helping them to identify and to mitigate risks, using our experience from investing in thousands of organisations over the years.
Our role is to ensure we are giving the social enterprises that we invest in the best chance of success – balancing business success and maximising their social impact.
Can you share a story of an organisation whose journey exemplifies Key Fund’s role in creating or safeguarding jobs?
Doncaster Refurnish perfectly exemplifies this.
Refurnish is one of Key Fund’s first ever, and longest-standing clients. It collects, restores and sells furniture to low-income families and works to alleviate poverty while benefitting the environment.
Since our first investment, Refurnish has grown significantly, with a turnover in the millions, they support hundreds of people each year – all whilst diverting hundreds of tonnes of furniture from landfill.
But what really stands out is Refurnish provide employment – and training – to people on the margins of their communities, as well as rehabilitation and integration opportunities to others. This includes prison leavers, people recovering from mental illness and those with physical disabilities. The team at Refurnish also champions projects working in schools and aiding women’s groups.
At its heart, Refurnish is about people – people creating meaningful work, training opportunities and ultimately giving dignity back to those abandoned by society.
That is why its work exemplifies everything we’re about at Key Fund.
How do you measure the long-term outcomes of your investments beyond just financial metrics, especially in terms of community wellbeing?
We don’t just track pounds in and out – we measure long-term change in people and places.
Firstly, we publish an annual impact report combining hard metrics matched against the profound human stories behind the statistics. In these we tally jobs created, training delivered and wellbeing outcomes, alongside testimonials from clients and the beneficiaries they work with.
Secondly, we don’t just stop at the investment. We conduct detailed client surveys, and we provide business support and signposting, to enable social enterprise leaders to balance their bottom line alongside their social impact.
Thirdly, our post-investment care and tailored support ensures that we can keep monitoring wellbeing indicators – such as staff retention, social value and community cohesion. We tweak our support based on what communities need, not just what the balance sheets say.
In the context of scarce public funding, what unique advantages does a social enterprise lender like Key Fund offer to mission-driven businesses?
In a world of shrinking public funding, what sets Key Fund apart is that we’re not just a lender, we are mission aligned. We understand the significant pressures that social enterprises face. Why? Because we were funded out of those same challenges.
Unlike traditional finance, we offer a blended approach and hands-on support – and we take time to fully recognise each organisation’s purpose and MO. We are flexible and patient, but most importantly, we are focussed on impact – this means we can take ‘risks’ other funders won’t to help mission-driven businesses grow when others won’t.
What lessons have you learned about scaling a social finance model, both for Key Fund’s growth and for the organisations you support?
As a social enterprise, we employ the same approach to growth and scaling for our clients as we do for ourselves. It is essential for us to deliver the right services, so that we are balanced in terms of local and sector knowledge.
In the early days of Key Fund, it became clear rather quickly that remaining a local social funder would be incredibly difficult – logistically and financially. So, we knew we had to expand to support social enterprises from further afield and strengthen our ability to continue supporting organisations closer to home.
To deliver the service at the level we pride ourselves on, we always need to ensure we have the right people and the right knowledge, ensuring that everywhere we operate, our offer is equally effective.
We have resisted the urge to expand nationally – despite being encouraged to do so – so we can maintain our current quality of service.
At the moment, we are in a perfect position with a fantastic blend of local and regional knowledge as well as social investment expertise, to do what we do well.
How does Key Fund work with other stakeholders to multiply its impact?
Collaboration is an essential part of what we do. Since our inception, working alongside other funders, and sharing our learnings and best practice has been a trademark of Key Fund.
In fact, we encourage partnerships among social investors. We live in a world of ever-decreasing public funding, so as social investors we need to plug that gap. And that is more likely to be a successful venture if we work together to do it.
Over the past 25 years, we have worked closely with various other stakeholders like Charity Bank and The Social Enterprise Support Fund as well as funders like Better Society Capital, The Access Foundation and The National Lottery Community Fund.
Ultimately, meeting the client’s need is the holy grail, so whatever we can do to ensure this is met, we will.
Looking ahead, what emerging sectors or business models are you most excited to back in the next five years?
In essence, we will continue to do what we are doing, delivering the right money at the right time, because it works. We are not sector-focused, but impact-focused. This approach is exemplified by the breadth of different clients we have worked with, spanning recycling, vertical farming, baking and more.
Something that is emerging that does excite me, though, is the discussion around ‘enterprise grant making’, using grant funding in a slightly different way to encourage more entrepreneurial activity in the very early stages.
Currently, grants are often only able to fund projects, not to cover business costs or invest in expanding a business’ offer, but this means a gap exists in the space before using repayable finance is a viable option.
I believe that we need to be more open-minded and thoughtful about how we use and deliver grant funding. By limiting grant funding just to projects, we risk missing the opportunity to enable organisations to grow in a more structured way.
In short, we want to keep doing what we’re doing, whilst also continuing the Key Fund approach of learning and developing new approaches.
As CEO and a CBE recipient, what’s your vision for Key Fund’s role in driving inclusive economic growth across under-served regions?
Key Fund was born out of the impact of the demise of major industries.
Many communities in South Yorkshire were massively impacted, with growing social issues and poverty, some even ceasing to have a reason to exist.
The founders of Key Fund wanted to find new ways of breathing life back into these places – by providing funds to enable local people to take control of their own regeneration.
Being from a mining family myself, I know how communities and people got stuck, and how this can ripple through the years. Many of the challenges persist, and this is why we remain focused on helping to rebuild these kinds of communities.
Personally, it is this work, with the most deprived communities, that gets me out of the bed in the morning – my raison d’être if you will. And it is central to Key Fund’s model, with 70-80% of our current beneficiaries in the top 30% most disadvantaged areas in the UK.
This perfectly exemplifies Key Fund’s ‘role’ in driving inclusive economic growth.
Nevertheless, we are always learning and striving to increase the breadth and depth of our impact. It is for this reason that, in the last half-a-decade, we have placed greater emphasis on also reaching marginalised communities and on intersectionality. But these are not quick fixes, and we need to do much, much more, so I see this approach consistently developing over the coming years.
