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

Introduction and background

Background

As part of a range of measures announced by the Scottish Government in March 2020 to support third sector organisations (TSOs) and communities across Scotland, the Third Sector Resilience Fund (‘TSRF’, or ‘the Fund’) was created to provide emergency funding to charities, voluntary organisations and social enterprises in Scotland which were struggling financially as a direct result of the COVID-19 pandemic and the subsequent lockdown.

Many TSOs were affected financially by the outbreak of COVID-19 in Scotland in early 2020, and the subsequent restrictions when the country went into lockdown in March 2020. This was predominantly as a result of being unable to generate their usual levels of income because of restrictions on their activities. A survey of Scottish charities – commissioned by The Scottish Charity Regulator (OSCR) in May 2020 – showed that 75% of charities reported having seen some impact on their finances.

Fifty-one per cent of charities responding to the OSCR survey reported having lost fundraising income. This was reflected in the information provided by TSRF applicants, who described a range of ways in which their fundraising activities had been affected. For example, many reported loss of income as a result of the inability to undertake fundraising activities reliant on physical interactions such as coffee mornings or organised sports events. Others expected to lose fundraising income as a result of the cancellation or postponement of large, sponsored events such as the Kilt Walk and the Edinburgh and London Marathons.

Forty-two per cent of charities responding to the survey reported loss of income through trading and other non-fundraising activities. Again, this was reflected in the TSRF applications, with many organisations ordinarily reliant on trading requesting support to replace the income lost as a result of being required to close their shops, cafes, tourist attractions, events venues and other sites of trading activity, many of which would not easily transfer online. Organisations also requested support because they had reduced income from fees from members or service users. For example, many organisations ordinarily rely on regular payments from members for activities such as sports training, exercise classes, children’s groups or educational activities. The lockdown restrictions meant that many of these organisations were not able to continue operating, and therefore lost substantial portions of their regular income.

The aim of the TSRF was to help third sector organisations through the initial crisis period by supporting them to pay rent, staff costs for workers who could not be put on the furlough scheme, and other essential overheads for a period of either four (in Phase One) or three (Phase Two) months. The intention was that by helping to pay for essential operating costs, TSRF funding would help many third sector organisations to remain in business in the short term, so that they could continue operating once the lockdown was lifted. TSRF funding was provided as both grants and loans.

The Fund was administered by three funding partners: Firstport, the Corra Foundation, and Social Investment Scotland (SIS). Firstport was responsible for managing the Fund, while they shared responsibilities for distributing the grants with the Corra Foundation. Firstport distributed higher-value grants, with Corra Foundation distributing smaller grants. SIS was responsible for managing the TSRF loans.

The TSRF opened for applications on 25th March and closed on 11th September 2020. It consisted of two phases: Phase One covered the period from 25th March – 22nd April 2020, and Phase Two covered the period 23rd April - 11th September 2020.

In Phase One, organisations could apply for a grant of up to £100,000 and/or a loan of between £25,000 and £250,000 to cover eligible costs for a period of four months. In Phase Two, organisations could apply for a grant of up to £75,000 and/or a loan of between £25,000 and £250,000 to cover eligible costs for a period of three months. While a minimum grant of £5,000 was initially proposed, this was withdrawn in the first phase of the TSRF to support requests from smaller organisations which needed less than this to continue operating.

In order to triage applications between funders, applications were sorted into three groups or ‘Tiers’, based on the amount of grant funding requested. Requests for up to £25,000 were assigned to Tier One and were assessed by Corra Foundation. Firstport assessed requests for grants of £25,000 and above, with these applications being assigned to either Tier Two or Tier Three depending on the amount requested.

Interest-free loans with repayment holidays were offered to organisations requiring more than the maximum grant amount, where these could demonstrate the ability to repay the loan. The provision of these loans aimed to ensure that more finance and a greater overall level of support was available to the sector than that which would be available through grant funding alone.[1]

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.

Any TSOs meeting the above criteria were eligible to apply for the Fund and funding decisions were made on the basis of need as demonstrated in each application.

Organisations were entitled to submit more than one application for a grant, which several did, but they could generally receive no more than one award. In a small number of cases where there were exceptional circumstances, an additional ‘top-up’ grant was awarded to organisations in addition to their main award – for example, in cases where an organisation had mistakenly submitted an original grant request that was too low.

Evaluation of the Third Sector Resilience Fund

This evaluation of the TSRF aimed to provide an understanding of the outcomes of the Fund, and the extent to which it achieved its aims. The evaluation also sought to support learning about the effectiveness of the Fund, and the processes and relationships that underpinned it, in order to inform the planning and design of future interventions.

This report uses TSRF application, awards and monitoring data to demonstrate the scale and scope of TSRF awards made to TSOs across Scotland to help the third sector through the financial disruption caused by the pandemic. To evaluate how the TSRF funding was used, the funding organisations and Scottish Government developed a monitoring form which was distributed to all award recipients. Recipients were requested to submit a light-touch end of project report within a few weeks of the end of the funding period. Organisations were asked for information about how they had spent the funds; their organisation’s current financial situation; the likelihood that they would remain operational for at least the next 6 months; and what impact the funding from the TSRF had had for the organisation.

The analysis includes breakdowns of awards made by local authority area, sector, Scottish Index of Multiple Deprivation (SIMD) quintile, organisation size, and financial situation and resilience of both applicants and recipient organisations.

The evaluation focuses on the grant aspect of the TSRF and not on the loans. This is because most organisations applied for grants, while only a small number applied for loans. A small number of organisations received blended support in the form of grants and loans.

The evaluation is structured as follows. Section Two sets out information about the distribution of the funding awarded – for example, how the funding was distributed across different local authorities and across organisations of different sizes and sectors.

Section Three explores how successful organisations used the funding and the impact of the funding received.

Section Four sets out stakeholders’ views on the management and implementation of the Fund.

Section Five provides a summary of the key issues and conclusions emerging from the evaluation.

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