Based in South Yorkshire, England, the Key Fund has been providing grants, loans and equity finance packages to social enterprises and voluntary groups in the region for over a decade. Its dual aim is to help social enterprises which have traditionally been unable to access mainstream finance, and to boost business creation in socially deprived areas. Recent years have seen a push in the fund towards loans (or a mixture of loans and grants) over pure grants, with the effect of instilling in social enterprises a keener business imperative.

Executive summary

The Key Fund, based in South Yorkshire, has been providing grants, loans and equity finance packages to social enterprises and other groups in the third sector since its establishment in 1999. As both a social enterprise itself and one of eight Community Development Finance Institutions in the Yorkshire and Humber region, it aims to help social businesses that are unable to access mainstream finance and to boost business creation in socially deprived areas. Part of its role is to encourage the model of social enterprise.

Between January 2011 and May 2012, the Key Fund has made 65 loans up to €30k, 15 between €30k and €120k and one over €120k. Delinquency rates are low and 70% of the fund’s investments are to organisations located in or that reach into the top 20% most deprived areas. As a proportion of its turnover, the two ERDF projects it currently manages are quite small, with a combined value of €16 077 of ERDF money with match funding of €16 463. The projects are performing well against targets.

The Key Fund provides a highly effective service that balances responsiveness and relationships with the locality with sound investment principles. Its innovative blend of grant and loan has simplified business start-up and growth for social enterprises and provided a keen business imperative. Several stakeholders believe that the model provided by the Key Fund is transferable outside the region, and the example it sets, of nurturing social enterprise with a mixture of grants and loans, is one that should inspire a spectrum of instruments to promote financial inclusion.

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