Community organisations who own or manage a heritage building are faced with ever increasing fundraising challenges. Grant-making trusts are spending out, pausing, changing priorities or disappearing altogether, which leads to an over-reliance on the National Lottery Heritage Fund as the main port of call for the conservation, restoration or repairs to historic buildings. As I’m sure many have noticed, the result is NLHF officials falling over themselves to manage your expectations and to remind you that the Lottery process is ‘increasingly competitive’.
In this context it’s good to be aware that there is another route to NLHF funding which differs from the main Lottery Heritage Grants programme.
Let me start with a caveat and say that this will not suit every heritage charity. The Heritage Enterprise programme (HE) is specifically aimed at enterprising community organisations (and also commercial organisations working in partnership with community organisations) to help them rescue neglected historic buildings and sites and return them to a viable productive use. The word Enterprise in the title suggests that there has to be a commercially sustainable business model at the end of it. For this programme NLHF encourages community organisations to work in partnership with the private sector, although it is not mandatory.
Many historic buildings and sites lie vacant and derelict, unable to fulfil their economic potential, because the investment in doing them up is too great compared to the commercial value of the building after restoration. HE is designed to bridge the funding gap that prevents a historic asset in need of repair from being returned to a beneficial and commercial use.
The case for grant funding will depend on there being a ‘Conservation Deficit’. This is where the existing value of a heritage asset plus the cost of bringing it back into use is greater than the value of the asset after development has been completed. By closing the gap (ie meeting the conservation deficit) NLHF hopes to encourage greater private sector involvement with many HE projects, working in partnership with community organisations to deliver both public benefit and commercially viable projects.
A few key points:
The involvement of the private sector is not mandatory but is encouraged. When applying as a partnership, you need to nominate a lead applicant, this can be a commercial organisation or a not-for-profit organisation. The lead applicant should provide a signed partnership agreement showing the involvement of each partner and how the project will be managed.
There is extensive guidance on the NLHF website, Heritage Enterprise Grants £250,000 to £5million | The National Lottery Heritage Fund, especially on ways to establish and calculate the Conservation Deficit and how to evidence and present it. This is key and the main point of distinction between HE and other NLHF grant programmes.
Applicants are still subject to the same four Investment Principles. There is no guidance on whether for this programme the Organisational Sustainability Investment Principle takes precedent but given the focus on ‘end-use that generates a sustainable commercial income’, it would make sense to assume it. But as ever with NLHF, the stronger you meet all four Investment Principles, the better.
That also means there is still a need for community engagement, but this doesn’t have to mean community access. If you want your building to become (for example) a shop, it can be difficult to use the space for shared community access at the same time. You should then look for heritage engagement in a different way, either through digital and/or through interpretation in the wider context of the building’s place in the area.
Applications will be considered solely on the basis of the Conservation Deficit and not on the applicant’s inability to fund a commercially viable scheme. The applicant will have to demonstrate that, once the gap has been closed, there is a commercial proposition that can ‘wash its face’.
Priority is given to projects that focus on heritage assets which are considered to be ‘at risk’ (for example on Historic England’s ‘at risk register’) or formally designated (for example listed or locally listed building, scheduled monument or in a conservation area).
You can apply for a grant from £250,000 to £5million. The application process is in two phases, similar to the main grants programme, with an EOI as a mandatory entry point. If you are applying for a grant of up to £1 million you must contribute at least 5% of the conservation deficit. If you are applying for a development grant to help you develop your delivery phase application, you must also contribute 5% of the costs of your development phase. If you are applying for a grant of £1 million or more, you must contribute at least 10% of the conservation deficit. You must also contribute 10% of the costs of your development phase.
HE is a programme, not a Fund. It means that there is no amount of money ringfenced for HE. The applications to HE go into the same pile as the main Heritage Grants programme, are assessed by the same teams and are subject to the same quarterly deadlines. Therefore, it is difficult to ascertain whether; by going for HE you’ll have less competition. Each application will be assessed on its own merits, but there will be, no doubt, fewer HE applications than main grant programme applications.
It would seem logical to assume that applicants in areas of deprivation are more likely to be faced with a significant Conservation Deficit. If property prices are low in your area the value of your building might not go up in line with the investment made. A simplified example: if your building in an area with low property prices was valued at £200k and the cost of development is £1m, it is unlikely that its value after restoration rises to £1.2m. If in stead, the building’s value after development increases to only £400k, your Conservation Deficit is £800k.
As always, we recommend that applicants talk through their plans with their local NLHF area managers even before submitting an EOI.
If you want to explore how your historic building could be transformed into a sustainable venture, get in touch to discuss next steps.
