Some of the UK’s biggest charities and social enterprise organisations have written to Chancellor Rishi Sunak to urge him to help them avoid a funding crisis following the end of the Government’s Covid-19 loans programme at the end of March.
The groups, which include The Joseph Rowntree Foundation, The Big Issue and the National Council for Voluntary Organisations, told the Chancellor that funding is the number one and most pressing issue facing the charity sector.
The letter warns that without a successor scheme to the Coronavirus Business Interruption Loans Scheme (CBILS) that continues the exemption of creditworthy charities from requirement to show more than 50 per cent of revenue comes from trading activity, many will be unable to access loans.
Charities face collapse without continued Covid-support
This, claim the organisations, could lead to many thousands of jobs being lost in the sector and the poorest and most vulnerable in society being left without support and dozens of support organisations facing the prospect of collapse.
The letter to Mr Sunak states: “Unlike conventional businesses, they [charities and social enterprise groups] face a double whammy of rising demand and falling incomes.
“Government should work with social investors, who disproportionately fund organisations in areas of deprivation, to provide accessible and affordable financing solutions.
“While charities, social enterprises, and community businesses have demonstrated remarkable resilience during this crisis, they generate less surpluses than mainstream SMEs and so will need financial support that is appropriate for their specific business models.”
Groups cannot afford commercial loans
The letter also calls on the Government to avoid a cranking up in the interest rates for any future Covid-support loans to charities, stating “their business models can only afford sub-10 per cent interest rates”.
The letter adds that without continued access for more social lenders to obtain British Business Bank guarantee accreditation or guarantee allocations available to the sector, then the scale and reach of deployment of funding into charities, social enterprises, and community businesses will be limited.
In all 33 charities, social enterprises, and community businesses signed the letter.
To ensure that charities, social enterprises, and community businesses could access CBILS guarantee loans during the crisis, Big Society Capital and Social Investment Business set up a £25m fund called the Resilience and Recovery Loan Fund.
To date, it has allowed a network of social lenders to approve over £16.7m in loans to more than 50 groups who would not have been able to access them otherwise.