Visiting Shape Arts with Christian Stannard

Last week I went with one of our investment officers, Christian Stannard, to visit Shape Arts, which is applying for a loan from the Modernisation Fund.

Shape Arts is a charity working to improve access to the arts for disabled people. It does this through four delivery aims:

• More disabled people employed in the creative industries
• More disabled people as audiences
• Disabled artists creating high quality creative work
• Disabled people participating in the arts.

It has a range of projects ranging from access audits of arts premises to providing tickets to arts events at reduced tickets.

Shape wants to get further involved in commissioning and is applying for a loan of £168,293 to employ a Partnerships Manager and a Partnerships Officer to identify contracting opportunities and develop relationships with other third sector organisations. It also wants to develop quality assurance systems to improve its chances of winning public sector contracts. It has observed that there has been an increase in demand for its employment support services and experienced a drop in income since the start of the recession. The Modernisation Fund, which is specifically for organisations affected by the recession, is therefore a good fit.

The meeting took about two hours and most of the time was spent by Christian talking with Richard Muncaster, the Development Director and Sally Yarwood, Finance Director to confimt the points they had put in the proposal. They discussed exactly what the partnership manager would do, what Shape could offer commissioners, what potential partners they would seek, the staff involved, how the organisation is run etc

Christian Stannard talking to Sally Yarwood and Richard Muncaster

A key point raised was the issue of bankability. We are unable to invest in organisations that are able to get finance from a commercial lender. Shape’s finances are in a pretty good shape so Christian wanted to confirm that it was unable to get a bank loan for the service. It was confirmed that they had approached banks for finance but as they had no solid assets (a building, for example) they were not interested, so an investment from the Modernisation Fund is fine.

They also spent some time going through the proposed budget and costs line by line. How the loan is going to get paid back is obviously important. In this case, Shape has planned for the project to become self-financing in the second year, when the contract income starts coming in.

So what happens next? Well, Christian will spend some time in the office doing further due dilligence and looking more closely at budgets and cashflow forecasts. He will then write a report recommending investment or not recommending investment.

The report will act as a case for the investment committee, which will make the final decision. In this case, as the investment needed is less than £200,000, it would be the internal investment committee which meets on a weekly basis that would make the decision. For larger investments it’s the external investment committe wich meets on a monthly basis that makes the decision.

Shape should expect to get a formal decision in about a month’s time, but based on what he’d seen today Christian was able to give an indicative ‘yes’.

Before we left, I did this very short video interview with Shape’s Business Development Director Richard Muncaster:

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