Charity Bank to pilot a 'PFI' for sector's building works

Model 'will transform viability' of community projects

Social lender Charity Bank is piloting a scheme to finance community projects that is similar to the private finance initiative used in many major public sector building contracts.

The lender is aiming to create a "public community partnership" in which a local authority or primary care trust signs a 25 or 30-year lease on a new community project, which allows the lender to provide finance to construct it.

Malcolm Hayday, chief executive of Charity Bank, said his organisation was close to finalising a contract to run a pilot scheme, but could not reveal details. He said the model could be used to fund a variety of projects.

"For example, a community group would like to construct a village hall, which by itself might only just be financially viable," he said. "But if it also constructs a doctor's surgery alongside, which a public body agrees to lease, that transforms the financial viability of the project."

"Once the community group secures the agreement, we can lend them the money and they can begin construction. Ideally, they would do this through a not-for-profit constructor."

Once Charity Bank had provided finance for the deal, Hayday said, it would be able to refinance it by offering bonds to the local community.

"This means that the maximum possible amount of money remains in the local community," he said.

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