FINANCE NEWS: Bank to donate interest payment

The Charity Bank has launched a new account that donates annual interest payments to charity, and uses deposits to make loans.

The first partnership under the new umbrella brand Just Interest, is with Tomorrow's People, a charity that helps young, unemployed people into work. But more tie-ins with charities are expected.

The charity will receive the 2 per cent annual interest, which can be Gift Aided to increase its value by 28 per cent, via an account marketed as Tomorrow's Vision.

For every £1m deposited, Tomorrow's People will get £20,000 a year or £25,600 under Gift Aid.

Depositors receive 5 per cent tax relief under Chancellor Gordon Brown's incentive scheme to encourage community investment. The deposit is used to make loans to Charity Bank's voluntary sector clients. After five years it is repaid to the investor.

Charity Bank says that it is the "first charity-specific, tax-rebated, savings account of its type".

The account is a development of Charity Bank's Community Investment Tax Relief Account which has attracted more than £7m of investment since its launch in March last year. The account offers 5 per cent tax relief in common with the Just Interest Account. However, under Just Interest, annual interest is paid to a named charity rather than the investor.

Malcolm Hayday, chief executive of Charity Bank, said of Tomorrow's Vision: "Hopefully we will raise a few million pounds".

The account is being backed by drinks manufacturer Diageo (whose predecessor Grand Metropolitan founded Tomorrow's People) and former governor of the Bank of England Eddie George. There will be an official launch on 12 March.

Hayday said that the Just Interest brand would be aimed at charities that did not want to borrow from the Charity Bank, but still need financial assistance.

"There could be considerable interest from community groups and churches - organisations with strong supporter groups," said Hayday. "They may want to raise money ahead of a capital project."

Tomorrow's People, which is celebrating its 20th anniversary this year, will use the funds to help people out of long-term unemployment. It costs the charity £2,287 to place an individual in work.

The charity's trust director Debbie Scott, said: "For the past 20 years we have been getting people back into work, changing pre-conceived notions about long-term, even lifelong unemployment.

With the Charity Bank working to show how money can be managed for the common good, it is the perfect partnership."

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