Third Sector Resilience Fund: evaluation

Executive summary

Background

This report presents the findings of an evaluation of the Third Sector Resilience Fund (‘TSRF’, or ‘the Fund’), announced by the Scottish Government in March 2020. The TSRF was designed to provide emergency funding to third sector organisations which were struggling financially following the outbreak of the COVID-19 pandemic.

The Fund was administered by three funding partners: Firstport, the Corra Foundation, and Social Investment Scotland. It consisted of two phases: Phase One (March to April 2020), during which organisations could apply for a grant of up to £100,000; and Phase Two (April to September 2020), during which organisations could apply for a grant of up to £75,000. Organisations could also apply for loans for amounts over £100,000.

To be eligible to apply for the TSRF, organisations had to meet the following criteria:

• they must be a constituted group, charity, voluntary organisation or social enterprise based in Scotland and/or primarily delivering services/activities in Scottish communities;
• they must have already been in operation before March 2020;
• their need for emergency funding must be directly as a result of the impact of COVID-19 and Scotland’s national precautionary measures;
• their need for funding must be to help their short-term cash flow position;
• they must be able to clearly articulate their costs and their funding requirements over the four month funding period (Phase One) or three month funding period (in Phase Two); and
• organisations were not eligible for TSRF funding if their current reserves could cover more than four months (Phase One) or 12 weeks (Phase Two) of operating costs.

This evaluation focuses only on the grant funding provided by the TSRF, and does not include analysis of the loans segment of the fund. This is because most organisations applied for grants, while only a small number applied for loans. A very small number of organisations received blended support incorporating both grants and loans.

The evaluation is based on an analysis of TSRF application and awards data, combined with data from monitoring returns submitted by funding recipients and data from interviews with key stakeholders connected with the Fund. The evaluation was undertaken by Scottish Government analysts.

Distribution of the funding

• A total of 3,466 applications were made for TSRF funding, with these applications coming from 2,906 organisations.
• 39.7% of all applications were successful, with a combined £22,608,610 of funding being distributed amongst 1,371 organisations.
• The maximum value of grants awarded was £100,000, and the average award size was £16,419.
• The largest proportion of funding (£5,144,658, or 22.8%) went to organisations based in the 20% most deprived areas in Scotland, while the smallest share (£3,201,045, or 14.2%) went to organisations based in the 20% least deprived areas.
• When annual expenditure/turnover is taken as a measure of organisational size, the majority of TSRF grants went to relatively small organisations; just over half (50.8%) of all awards were made to organisations with annual expenditure or turnover of less than £100,000.
• Almost three quarters of the Fund applications (73.7%) were from organisations which had at least some financial reserves, while around one quarter (26.3%) were from organisations which had zero reserves. 70.6% of awards were made from organisations which said they had at least some reserves, while 29.4% of awards went to organisations which had zero reserves. Further analysis showed that amongst all applications for which data was available, around half (50.2%) were from organisations which had reserves sufficient for less than one month of (notional) expenditure, while 39.3% were from organisations which had reserves sufficient for less than two weeks of expenditure.

Use and impact of the funding

• The analysis of the use and impact of the funding is based on monitoring forms from 785 funded organisations, or 57.2% of the 1,371 organisations in receipt of funding.
• 60.7% of the organisations that responded said that the funding had prevented their organisation from going out of business.
• Over half (50.6%) of all funding was spent on staffing costs. 80.5% of the responding organisations said that their staffing levels had stayed the same since receiving TSRF funding, while a number of organisations said that without the funding, they would have had to reduce their services and make redundancies.
• 86.3% of the responding organisations said that the funding enabled them to continue paying overheads. The fund enabled organisations to retain operational capacity, premises or – for those that had to cease operations completely – to enable them to avoid closure and maintain readiness to return to full activity in the future.
• The Fund also had a significant impact for service users of organisations in receipt of funding. Several organisations stressed the importance of their work in providing essential services within their communities. 61.5% (479) of the responding organisations said that they provided mental health and wellbeing services, while over three quarters (77.5%) said they supported people who were marginalised, and 64.7% said they supported people who were financially at risk.
• Several organisations said that the TSRF helped them to adapt and diversify their service delivery at speed, and to continue operating during the lockdown.
• Cash reserves were a challenge for many organisations; this included organisations which – although their cash balance looked relatively healthy – were not able to use reserved funds, as well as organisations that did not want to spend their cash reserves due to concerns about the level of uncertainty ahead.
• Over half of organisations (54.9%) had more reserves at the end of the funding period than they did when they first applied for a TSRF grant. However, increases in reserve levels cannot be solely attributed to the TSRF and may be at least partly the result of other support mechanisms – such as the UK Government furlough scheme – and funding that were available to third sector organisations at the time.
• Despite the importance of the TSRF in supporting organisations to remain viable during the early stages of the pandemic, many organisations remained uncertain about their future viability at the point when they completed their monitoring forms, in Autumn 2020. These organisations were also reliant on the relaxation of lockdown restrictions to aid their financial recovery.

Stakeholders’ views on Fund management and implementation

• Stakeholders stressed the collaborative and fast-paced nature of the process of setting up the fund.
• Stakeholders generally agreed that the TSRF’s eligibility criteria were clear and a good reflection of the Fund’s aims, although challenging discussions often emerged – particularly in relation to the eligibility criteria relating to cash reserves. Stakeholder interviewees had some concerns as to whether cash reserves were the best way of determining which organisations were in greatest need of funding.
• Stakeholders generally felt that the application process was relatively fast and that organisations typically received funding quickly. Although many said that the TSRF application form was short and clear, stakeholders noted that some organisations nevertheless needed help and support with the application process. A few stakeholders also felt that greater efforts should have been made to provide unsuccessful applicants with feedback.
• Stakeholders largely agreed that their approach to risk management was a successful one, with enough due diligence being carried out to ensure the funds were used in the manner for which they were intended.
• Stakeholders were of the view that the TSRF largely achieved its aims of helping third sector organisations to remain operational or to avoid going out of business during the early stages of the pandemic. However, some felt that certain aspects of the Fund could have been improved or rolled out in a different way – for example, by widening the eligibility criteria to include organisations with greater cash reserves.
• Stakeholders provided suggestions for how future funds could be administered, based on learning from the Fund – in particular, it was felt that future funds should replicate the Fund’s principles and have short, clear application forms, with minimal monitoring requirements and clear eligibility criteria. There were also suggestions for future funds to have more guidance prepared to aid applicant organisations, and to enable greater involvement of Third Sector Interface organisations (TSIs) in the process of making decisions about – and distributing – funding.