Finance for Charities falls £2.1bn short
- 13 Feb
A report shows that the amount that charities and social enterprises want to borrow is £2.1 billion more than the finance that is available.
The gap is thought to have grown by up to £400 million since 2011 due to funding cuts and increased demand.
Mind the Finance Gap: Evidencing Demand for Community Finance shows that the government estimate in 2011, when giving approval for state-aid for social enterprise lender Big Society Capital, shows the difference was at £1.7 billion then.
The report says that this amount could have grown by up to £400m since that point because of worsening funding conditions and increased demand from entrants to the market.But it says the total size of current lending to third sector organisations by CDFIs is £145m, and outside this there is only a small amount of other lending by social investment finance intermediaries.
The report says there is an annual demand of up to £6.75bn for the type of community finance provided by CDFIs, which covers not just social enterprise but also businesses and individuals, mostly in deprived communities, that are unable to access mainstream credit.
However, the total annual funding delivered by the community finance sector is only £700m.
The report says this demand could not be met by mainstream bank lending, but only by "a partnership between public, private and social investors" who "share common economic and social objectives":
Meeting potential existing demand implies developing better-capitalised, more productive, more scaleable providers and stimulating growth of innovative, lower-cost models.
Source: Third Sector
Image source: http://www.sxc.hu/photo/1222895
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