Levelling Up: new capital fundraising opportunities for local charities?

With the recent announcement of Round 2 grants, we share our experience of the Levelling Up Fund and what capital fundraising opportunities it offers for charities.

What is the Levelling Up Fund?
In January 2023, the UK Government announced the latest 111 projects to benefit from Round 2 of its £4.8 billion Levelling Up Fund (LUF). An earlier Round 1 tranche of successful bids was announced at the Autumn Budget in 2021, a mere six months after the formal announcement of the Levelling Up Fund within the 2021 Queen’s Speech.

The stated aim of LUF is to improve everyday life across the UK including through the regeneration of town centres and high streets, the upgrading of local transport, and investment in cultural and heritage assets. This is achieved through the provision of levelling-up support for smaller infrastructural projects that have ‘a visible impact on people and communities’. Bids are capped at £20 million, except for transport bids which are capped at £50 million.

The LUF prospectus states that it will ‘prioritise places in need of economic recovery and growth, regeneration and improved transport connectivity’. However, what constitutes a place in need is not well defined beyond a broad-brush categorisation of each local authority area into one of three tiers of priority, all of which are in any case eligible to receive support from the Fund.

While LUF can only accept bids from local authorities, in practice there are ways in which independent local charities can benefit indirectly by participating in levelling up projects which are being developed in their locality, and boost capital fundraising opportunities.

Criticism and controversies
The Levelling Up Fund has come in for considerable criticism over aspects of its operation, and there have been persistent accusations of political bias in decision making. The fact that bids require the active support of a local constituency MP to have a realistic chance of success has bred suspicions of politicisation, while it has also been noted that the unrealistically early deadlines set for spending the funds awarded in the first two rounds seem to be not unconnected to the anticipated date of the next general election.

LUF is managed jointly by three government departments, including the Treasury, in an arrangement which is innovatory in terms of joined-up central government. However, this has not prevented criticism of the fact that the funding is centrally controlled from Whitehall rather than devolved to decision-makers in the regions. Some critics feel that local authorities are being forced to compete with one another in developing their bids, while another concern is that in Scotland, Wales and Northern Ireland there is no decision-making role for the respective devolved governments.

Recently, new concerns have also emerged because the Chancellor has chosen not to inflation-proof existing LUF funding. Already hard-pressed local authorities are therefore finding that their successful bid sums are no longer sufficient to cover escalating project costs and they face difficult choices over the potential need to pause, scale back or even cancel projects in the absence of other sources of funding being available.

Future trajectory
Notwithstanding the various issues and problems described, it seems highly likely that the Levelling Up Fund is here stay. There is cross-party consensus that regional inequalities have become severe and urgently need to be addressed, while the injection of targeted central funding at the local level tends to be popular with voters. Indeed, Sir Keir Starmer said in October 2022 that a potential future Labour Government would ‘pick up the challenge of levelling up’.

To date, LUF has supported 216 projects across the UK and awarded £3.8 billion through its first two rounds, although only a small proportion of this funding has so far been spent due to local delays with projects. It is expected that a third round of bidding will open later this year in relation to the Fund’s remaining unallocated £1 billion.

Opportunities for charities
Within the Round 1 decisions announced in November 2021, cultural and heritage projects received 26.5% of the £1.7 billion allocation. These projects focused on creating or upgrading cultural assets such as museums, theatres and libraries, sports facilities, historic buildings and landmarks, visitor attractions and green spaces. They included projects to acquire and renovate important heritage buildings for new community uses, as well as projects to create or improve community hubs and spaces.

LUF encourages local authorities to regard investing in local cultural assets as one way in which to rejuvenate left behind communities and places. However, the levelling up agenda frames such rejuvenation strongly in terms of anticipated economic outcomes, which in terms of culture and heritage tends to mean the impact LUF investment can have on the local and visitor economy. Alongside delivering local economic growth and improved employment opportunities, attention is also given to the contribution projects can make to wider strategic objectives such as increasing footfall in town centres and the UK’s commitment to achieve net zero carbon emissions. This is a different way of looking at things to that favoured by other major funders such as the National Lottery Heritage Fund, which tend to measure the impact of their funding more in terms of people and community activity than economic outcomes.

Local authorities developing a LUF bid are allowed to adopt a portfolio approach to the composition of the bid provided it remains coherent in overall terms. Furthermore, since the lead time for preparing a detailed bid is very tight (typically a few weeks only), and as the timeframe for spending any funds awarded is also short, there is a natural logic that encourages local authorities to construct bids from a suite of already planned projects which are, to borrow the terminology of a recent UK prime minister, ‘oven ready’. This creates a genuine opportunity for local charities, particularly those working within a cultural or heritage context in a town centre setting, to lobby for a long-planned and cherished project to be incorporated within a local bid.

Look outwards and keep communicating
In our experience, local authorities don’t have all-seeing eyes regarding what is being planned at a grassroots level within their authority areas. They may be aware, for example, of exciting plans at the town museum but be oblivious to equally exciting ideas being discussed at the parish church – listed parish churches are particularly susceptible to being overlooked since they have discrete Church of England planning rules that don’t directly involve the local planning authority.

Charities need to take the initiative by establishing good lines of communication with the relevant officer at their District or County Council, so any promising opportunity to take part in a LUF bid is not missed. They should also appreciate that their project will probably form just one component of a larger bid and will need to be framed in a way that fits with the overall mission of the bid and its identified outcomes. Of course, some charities may find it challenging or even impossible to adjust their plans in ways that would allow their inclusion within a LUF bid. But do remember that showing an interest in partnership working and developing a more outward-looking focus is becoming an increasingly important consideration for many other grant-awarding funders too. Learning to reframe your project in terms of its benefit for the local economy will not necessarily change the fundamentals of what it is you are planning to do.

With LUF typically covering up to 90% of the capital costs of projects included within a successful bid, it is certainly worthwhile doing some homework to determine whether there could be any scope for including your long-cherished cultural or heritage-focused capital project within any bid which your local authority is thinking about submitting. Even if such inquiries are not successful you may find that merely by making connections in this way other local-based funding opportunities and capital fundraising ideas of which you were not previously aware start to emerge.

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Read about Craigmyle’s part in the LUF award to Pembrokeshire County Council.

Craigmyle provides a wide range of services to charities, including capital fundraising strategy, bid writing and bid review. If you would like to discuss how we could support your capital or revenue fundraising, get in touch.