In a somewhat perverse display of timing, charities are attempting to become more involved in the financial services sector just at the moment when its reputation has sunk to an all-time low.
Recently, the National Aids Trust launched a travel insurance product to become the latest in a long list of voluntary-sector agencies to offer insurance. Among the others to have entered the market are Carers UK, Scope, Leukaemia Care and, of course, stalwarts Age Concern and Help the Aged.
The reasons are obvious - potentially, charities can offer a niche captive market and a trusted brand to insurers, and in return they can deliver cheaper, better-tailored deals for their clients.
In some cases, charities are providing the only route to financial products for their beneficiaries, as Eve Martin, network operations manager at Leukaemia Care, explains. "If a young couple wanted to buy a home, and one of them had had leukaemia as a child, it would be nigh on impossible for them to get a mortgage,
she says. "We had one woman of 29 who was refused a mortgage because she had leukaemia at the age of seven - they wanted her to wait 27 years without a relapse before they were willing to give her the relevant insurance policies."
Like the National Aids Trust, Leukaemia Care will start providing Freedom travel insurance in conjunction with NW Brown Insurance, but its long-term plans involve offering mortgages, motor and home insurance.
Many charities exist to help vulnerable groups fight discrimination and many are now discovering that offering them access to previously unobtainable financial products is an effective adjunct to anti-discrimination campaigning.
"Historically HIV was considered terminal and people were excluded (from insurance) for that reason,
says Suzanne Williams, communications officer at the National Aids Trust. "Part of the reason that we've launched this product is because people are living longer, healthier lives, if they take their medication."
Rather than blanket exclusions, the National Aids Trust insurance policy will assess cases individually and take into account the state of a client's health and whether their HIV is well-managed.
But providing access to basic services for beneficiaries is only one half of the argument for getting involved with financial products. As Age Concern England and Help the Aged know, trading through financial services can be lucrative.
Help the Aged makes £1.5 million annually through its financial services, which include travel, motor, pet and caravan insurance. Seventy per cent of Age Concern England's unrestricted income comes through its trading arm Age Concern Enterprises. This amounted to £15 million in the last financial year and is estimated to top £17 million during 2002.
Products sold through Age Concern Enterprises include energy, travel insurance, motor insurance, home and contents insurance, long-term care plans, life insurance and funeral planning. Eighty per cent of the company's business and 90 per cent of its profits come through its insurance services.
The cash generated through these products supports numerous services for older people including home-care services, day centres and holidays.
Generating this amount of income can help organisations such as Age Concern go beyond the headache of chasing grant funding simply to meet core costs and improve their long-term chances of sustainability.
But Tony Page, director of Age Concern England and managing director of Age Concern Enterprises, has a word of warning for charities considering a rush into the financial services world.
"Don't ever think this is an easy option. This has taken years of hard work and I've got some of the best staff in the business,
he says. "It's dangerous and risky - you need buy-in from trustees and directors, the right skills and you have to be aware that it is very expensive to develop."
Age Concern now has half a million older insurance customers. Such a sizeable market means the charity can afford to "bulk buy
products from insurance companies, allowing them to negotiate lower rates and off-load risk onto the insurance carriers. Page is doubtful whether other charities would find it easy to get anything like the numbers of customers required.
But Terry Green, director of NW Brown Insurance, disagrees. He expects 12,500 Freedom travel insurance policies to be sold in the first year and a later roll out of diverse insurance products to "wider affinity groups within the medical sector".
As medical and HIV charities will not "own
the insurance packages under the Freedom scheme - unlike Age Concern and Help the Aged - they will avoid the financial risks taken on by those charities. But they will also miss out on the full financial potential of a scheme that could reach a niche market of millions of people in the UK. Instead, charities will get up to 30 per cent of the profits under the Freedom scheme.
Charities dipping their toes into this market need to be extra careful in order to protect their greatest asset, their reputation. "If you screw with the brand, then you're finished,
But perhaps now is a good time for a charity foray into financial services after all. In a post-Enron world, charity-branded financial products may be just what cautious consumers are looking for.