The National Lottery Heritage Fund will offer loans as well as grants for the first time, as part of its strategy for the next five years.
The fund, which changed its name from the Heritage Lottery Fund this week, said it hoped the loans would encourage other funders to get involved in heritage projects.
In its strategic funding framework, released today, it also unveiled plans to commit more than £1bn of National Lottery money to heritage projects between now and 2024, and to ensure that 80 per cent of its funding decisions would be made locally rather than nationally.
The framework was developed after a consultation with more than 13,000 people, including National Lottery players and heritage organisations, on what the fund’s priorities should be.
The new approach will include a major focus on nature, communities and ensuring everyone can enjoy heritage, which were named as the top three priorities by those consulted.
A spokesman for the NLHF told Third Sector that the funder expected loans and social investments to be "a relatively small part" of its funding portfolio compared with grants.
"We want to encourage and support organisations working in heritage to diversify their income, and offering loans rather than grants – allied with support to increase financial management and enterprise skills – is a positive way of doing this," he said.
"It will also enable us to recycle some of our funding, increasing our own impact, and attract funds from other public and private sector partners, some of whom would not otherwise be investing in heritage."
He said it had not yet been decided when the loans would become available, but the fund had made an initial investment in a loan fund, in partnership with the Architectural Heritage Fund, which will be launched in the spring.
Decisions on which projects would receive funding would be devolved for grants of less than £5m under the new strategy, the announcement said, with all decisions for projects in Scotland, Northern Ireland, Wales, northern England, the Midlands, and London and the south happening at a local level.
This would account for about 80 per cent of the funding handed out by the NLHF, the statement said.
"We strongly believe these investment decisions should be taken by people who live or work in the areas and communities that benefit, and who understand the different strategic needs and distinctive character of the heritage across the four countries of the UK," the framework said.
The move would be backed up by a wider network of office and staff locations across the UK to support the new structure, the framework said.
The fund’s National Lottery Grants for Heritage programme, for any type of heritage project seeking between £3,000 and £5m, is open for applications now. For more information, visit the NLHF website.
Heritage funding campaigns designed to fulfil strategic needs or funding gaps, such as capabilities and helping organisations build their capacity and organisational resilience, will open later in the year. There will be two rounds of major grants of more than £5m in 2020/21 and 2022/23.