Charity Bank announces strong start to the year as Big Society Capital invests a further £2.5 million
Big Society Capital has invested £2.5 million in the share capital of Social Enterprise Mark holder Charity Bank and has committed in principle to invest a further £2.5 millionon or before 1st December 2017. This will complete Big Society Capital’s pledge in March 2014 to invest up to £14.5 million in ordinary shares of Charity Bank.
Charity Bank, the ethical bank that uses savings to make loans to charities and social enterprises, has lent over £180 million since 2002. Charity Bank is run for the sector and owned by the sector, as all of its shareholders are charitable trusts, foundations and social purpose organisations. This further investment from Big Society Capital will allow it to make more loans to social sector organisations in the coming years.
This investment is made as Charity Bank experiences continued growth. Charity Bank has had a strong start to the year with £28 million of new loan approvals in the first five months of 2017. This continues the momentum since Big Society Capital’s initial investment in 2014, with the loan book growing by over 25% per year in the two years to 31st December 2016.
George Blunden, Chairman of Charity Bank, says: “These further injections of capital from Big Society Capital will enable us to meet the growing demand for loans from charities and social enterprises.”
“Share capital is vital to our mission. It underpins the bank and enables us to leverage our savers’ money. An investment in Charity Bank creates a multiple effect – for every £1 of share capital invested we can lend £8 to help create lasting social change in our communities.”
“When Big Society Capital pledged its original investment, we said that we hoped it would be the first of a small number of significant new investors over the next five to ten years. The Mercers Charitable Foundation invested a further £1 million in 2015 and the Barrow Cadbury Trust invested £250,000 in 2016.”
“We are inviting other charitable trusts, foundations and social purpose organisations to invest in our share capital and join with us in using the tools of finance to create a better society for all.”
Anna Shiel, Head of Origination of Big Society Capital says: “Big Society Capital’s investment in Charity Bank plays an important role in making capital available to small and medium sized charities. Over 850 loans have now been made to organisations totalling more than £180m. These loans have helped support people all around the UK, with 97% of organisations saying it has contributed to achieving their mission and 68% saying the loan helped them to expand their services. Upon the completion of our investment, we look forward to seeing more people and communities supported by their work.”
Patrick Crawford, Chief Executive of Charity Bank, says: “The stable quality and growing size of our loan book demonstrate that loans can be an important and effective tool for social sector organisations seeking to make a bigger difference to the world around them.”
“In the face of a shifting political, social and economic outlook, one thing is certain: the social sector will continue to play a vital role in addressing the needs of communities across the UK. At Charity Bank, we have the resource and capacity to play our part. We are here to help charities and social enterprises adapt, take advantage of new opportunities and create a better world.”
A team from Linklaters led by Aisling Zarraga and Rebecca Rigby acted on a pro-bono basis for Charity Bank, supporting its General Counsel in advising the Board on Big Society Capital’s investment. Linklaters has contributed over 1,000 hours of specialist legal advice to Charity Bank over the past four years.