Finance: Venturesome makes 100th loan

Venturesome, the loans and investment fund set up by the Charities Aid Foundation, has reached the landmark of funding 100 charities.

Established in 2002 by John Kingston, a former venture capitalist and fundraising director at Save the Children, the fund has raised £6m - half of which is committed in loans and other forms of financing. It has set a growth target of raising £10m for investment by 2008, by which time it wants to be negotiating more than 50 deals a year.

The fund supports projects that would be considered too risky by mainstream finance institutions. It has funded overseas and children's charities, as well as those working with disabled people and offenders. It aims to get the money back, but is prepared to accept some losses.

"We are acting as an intermediary between donors and charities," said Kingston. "It's an interesting role and a new way of supporting the sector - not just giving away money. We're mezzanine finance: grant-making is the ground floor and senior debt the top floor."

The fund has a default rate of 10 per cent, compared with an initial target default rate of 20 to 25 per cent, and a default rate of 1 per cent for the mainstream. But Venturesome still hopes to be able to recycle its investment fund nine times.

Forty per cent of its investments have been for working capital, the rest split between bridging finance and development capital.

Kingston said Venturesome should be judged not only by how big it can grow, but also by how it changes the way the financial mainstream behaves.

"In a sense, we are trying to bring in other people's money," he said.

"If we can show the clearing banks that the risk of lending to charities is no greater than that of lending to small companies, then our influence is stronger than our actual practice."

Venturesome has attracted investment from the Charities Aid Foundation, Barclays, five foundations and five 'high net worth' individuals. According to one individual funder, "the evidence for the short-term impact on particular charities is compelling".

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