Until fairly recently, charities also needed income to buy property, fix the roof and acquire vehicles - things that could be called capital expenditure. This mismatch is now being challenged. Compared with even two years ago, trustees are now more ready to take out mortgages on properties or to lease vehicles. So we have more available income for delivering on social purposes, because loans can be used to finance our capital expenditure needs.
Fundraisers work hard to unlock income, organising direct mail campaigns, standing orders and grants from trusts and foundations. The next challenge is to unlock capital for the sector. And loans are the first step along this journey - the banks and specialist lenders such as Venturesome are bringing new resources to the sector. What lies further down the track?
There are clues from the income side. The fair-trade movement has asked people not to give but to buy - initially from the stall at the church, but now from mainstream supermarkets such as the Co-op and Marks & Spencer.
On the capital side, Cafedirect, the fair-trade hot drinks company, raised £5m to invest in the growth of its business. That wasn't through gifts, but the subscription of share capital. Charity Bank accepts deposits from its supporters, which are re-lent to charities as loans. Ethical investment taps into mainstream pension funds and other major investment streams. The micro-finance sector started off as a charitable idea, but is now served by mainstream financial institutions.
A robust social investment market will include a range of suppliers, including banks, specialist charity lenders, private individuals and investment funds, plus a variety of users ranging from charities to social enterprises and social-purpose businesses such as Cafedirect.
In the future, as well as giving to charities, consumers may decide to invest 10 per cent or more of their savings in the social investment marketplace. They might, for example, make deposits with Charity Bank, buy shares in Cafedirect or wind farms or give loans to local charities to help them finance building projects.
As these ideas become less radical and some sort of pattern is established, the mainstream will also arrive, bringing substantial extra resources to the third sector and enabling us to achieve social change faster and more efficiently than would be the case otherwise.
- John Kingston is director of Venturesome, the Charities Aid Foundation's social investment initiative.