FINANCE NEWS: London charities get loan boost

MATHEW LITTLE

The London Rebuilding Society, a community development finance institution (CDFI), is to launch a share issue in September to raise around £500,000 to lend to voluntary organisations and social enterprises.

The society, which began making loans at the start of this year, is seeking investment ranging from £250 to £20,000 from individuals, charities, banks and companies.

The funds will boost the LRS Social Enterprise Fund, which makes loans above £5,000 to social enterprises, co-ops, and trading subsidiaries of charities.

London Rebuilding is also hoping to raise money for a "community talent pool

- a network of advisers that visit enterprises to assess their finances, management and legal structures before loans are made. The society believes that finance must be accompanied by development support for organisations making the transition from grants to earned income.

"We are unique in having a network of local development managers who offer access to finance, business advice, and support based on the concept of relationship lending,

said the society's chief executive Naomi Kingsley.

"So far they have given advice, support and training to more than 200 groups, around 30 of which have been directly assisted in developing their funding and investment strategies."

A web-based self-assessment system for enterprises is also planned.

London Rebuilding is also piloting a mutual aid fund this autumn which will offer smaller loans than those offered by Social Enterprise Fund.

Organisations will have to buy a shareholding in the society in order to access the loans. They will also be offered discounted training and peer support. "It will be a kind of credit union for the not for profit sector using shares,

said Kingsley.

London Rebuilding is also undertaking research into the barriers which prevent voluntary organisations taking loan finance.

Since it began operating in April 2001, the society has made three loans and approved a further six. Money has been awarded to Core Design, a trading subsidiary of Core Arts which provides arts education to people with mental health problems, Working Well, a charity which delivers training, education and employment to people with mental health problems, and to CT Plus, the trading arm of Hackney Community Transport.

Charities have been urged to invest in CDFIs under programme-related investment. Consultant David Carrington said last month that a conservative policy of investment was stopping a significant influx of funds into CDFIs.

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