The Charities Aid Foundation (CAF) is to launch a Risk Investment Fund to provide financial support to charities deemed too high a risk by mainstream lenders.
CAF will initially invest £1 million in the fund, which will use debt, underwriting, guarantees, redeemable grants and equity investment to complement grant support to voluntary organisations and social enterprises.
It hopes to occupy a "niche area
between grant-makers and lenders to charities such as CAF's own Investors in Society.
John Kingston, CAF's head of individual donor services, said that the fund will also raise money from personal charitable trusts, foundations and companies.
CAF aims to raise the fund to £50 million over 10 years. "We anticipate that growth will be exponential rather than straight-line, and therefore we are targeting a capital fund of £5 million within the first three years,