FINANCE NEWS: MPs extend Fund's grant-giving

Backbench MPs have forced through a change in the law to enable the Community Fund to make grants to endowment trusts.

The National Lottery Funding of Endowments Act, which received royal assent on 18 September, allows voluntary organisations to apply to the Fund for lottery grants to set up or augment endowments.

Previously they could receive grants from all other lottery distributors but not the Community Fund.

The Act was sponsored by the Conservative MP for mid-Norfolk, Keith Simpson, and supported by the DCMS, which meant it was allocated enough Parliamentary time to become law.

It was based on an original bill tabled by Labour MP Ian Gibson in 2000, which limited the change to registered charities. It received a second reading, but the 2001 election interrupted its progress. The new law applies to non-charity voluntary organisations as well.

Endowment investment funds are often set up by charities to provide a source of income to support grant-giving to beneficiaries.

The bill was tabled following a campaign by the Eastern Daily Press to raise £1m to endow the Norfolk Millennium Trust for Carers. The Trust, which has made more than 100 grants to carers in the region, was ineligible to apply for lottery funding. All of Norfolk's MPs supported the bill.

Simpson said: "Endowment funds can be a useful way of providing long-term revenue funding, particularly for voluntary sector bodies. They can enable them to plan strategically and with some certainty about the security of funding, enabling them to operate more effectively on behalf of their client groups. They also enhance creditability with third-party funders and partners because the core funding is guaranteed."

Simpson conceded that the Act could result in additional drains on distributors' resources, but added that it was a policy decision for each distributor to determine how to prioritise grants for endowment from other kinds of applicant.

A spokeswoman for the Community Fund said: "We are pleased that the law has been clarified and we are waiting for guidance from DCMS and the Treasury."

But she cautioned that the new law might not signify a big change in grant-giving: "The decisions will be taken by grant committees and for them the concern is value for money. Interest rates are low at the moment, and committees will have to consider whether they are better off funding groups with projects in the normal way. If they were to fund an endowment trust, they would have to be sure it would deliver better results."

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