Social investor Big Society Capital is looking to set up an emergency loan fund for charities, and has asked the government for its support.
The fund will pool resources from a range of social lenders and is expected to amount to £100m. The final figure will depend on how many lenders take part, and more details will be shared next week.
Big Society Capital has also written an open letter to the secretary of state asking the government to give charities the same support it is offering to businesses.
While charities can, in principle, access the Coronavirus Business Interruption Loan Scheme, which gives businesses access to finance for up to six years, in practice many of them will not be eligible for it. Only charities that receive half of their income from trading activities will be able to apply.
The letter says:
“We believe that social enterprises and charities which serve a public benefit should receive the same government support as private companies and that there should be a level playing field. Therefore, as social lenders, we are working together with great urgency to create an Emergency Liquidity Facility which would serve this vital sector and be able to lend quickly to organisations supporting social needs facing immediate cash flow problems or in need of working capital.”
Big Society Capital said that the need is too big for social investors to be able to respond by themselves and is asking for the government to both extend the Coronavirus Business Interruption Loan Scheme to all charities and to contribute to its Emergency Liquidity Facility.
The letter continues:
“There is a real risk that many organisations that could be financially sustainable will simply fold or cease trading and never be able to recover without the ability to borrow money that is being offered by the government to private business.”
Charities can also apply for the government’s Coronavirus Job Retention Scheme, which allows organisations to put staff on leave at 80% pay without making them redundant. However, this does not help charities that have seen their income drop but still need their staff to work, in order to help their beneficiaries and maintain essential services.
Figures across the sector have been asking the government for a dedicated support package for charities over the past week. More than 200 MPs have also signed a letter asking the government to support charities.
While the Prime Minister, Boris Johnson, has said that “the culture secretary and the chancellor are looking at a package of measures to support charities”, details are yet to emerge.
Source: Civil Society News