Charities have been warned that councils may begin to ask them to prove their social impact as part of rental agreements.
Antonia Swinson, chief executive of the Ethical Property Foundation, a property advice organisation for the voluntary sector, said she had heard of a few councils in London looking to introduce discounts on rent for organisations that can prove their social impact.
Speaking to Civil Society News, Swinson said her first concerns arose after a recent call with a charity client.
She said the charity had contacted her organisation after being offered a higher rent by a London borough, but with money being deducted if the charity could prove its social impact.
In response, Swinson recommended that the charity “had to be extremely careful and to get legal advice”.
And Swinson said she had been contacted by a London Borough in recent weeks asking for help with its plan to measure the social impact of its tenants.
Swinson said her organisation had a good relationship with the council but had to turn down the offer because “social return on investment is very technical, it is nothing to do with us”.
She also said she had heard of another London borough asking a non-charity tenant to prove its social impact.
While there are no firm examples of such a contract being in place between a council and its tenants, Swinson said it could be an “early warning sign” for charities that local authorities might ask them to prove their impact as part of a leasing agreement.
She said: “Establishing social impact is great. I used to be Social Enterprise Scotland CEO and we brought it into our members.
“If you were delivering elderly care or social care, you could demonstrate £15 or £16 of social value and it is great, but this is quite a disturbing development, when it is being seen to reduce rent.”
‘Tool of eviction’
Swinson said charities needed to be aware of the possibility of councils asking them to prove their social impact and said she was concerned that local authorities might use it as a “tool of eviction”.
She said: “It could be a double-edged sword. It could be a means of charities retaining their affordable rents with the local authorities by establishing their social impacts but on the other hand who is going to establish it?
“If it is the council have gone up to £16-17,000 and they give a very low proxy amount per elderly lady, fed child etc, then you could find yourself still unable to pay the rent.
“It is something charities need to be aware of. It may not necessarily be bad. But by God charities are going to have to be on the ball in proving their social impact.
“I would say to any trustee they look at establishing their own social impact and not allow landlords to establish it.”
Swinson also said that the Social Value Act “was never conceived as a way of setting rents” and that it was intended to "enable charities to win council contracts".