The director of Golden Lane Housing, the issuer of the first charity bond to be listed on the London Stock Exchange, has said that despite recent criticism of charities using social finance it can be a useful tool for the sector.
Alastair Graham (pictured), the director of Golden Lane Housing, an arm of Mencap, was speaking at a breakfast briefing on retail charity bonds hosted by the Lord Mayor of London, Alderman Fiona Woolf, and organised by PricewaterhouseCoopers.
Phil Caroe, chief operating officer at Allia, a charity that supports organisations dedicated to making a positive social impact, asked Graham to respond to a recent article on civilsociety.co.uk in which Kathy Evans, chief executive of Children England, suggested social finance was not good for the sector.
Graham said that for Golden Lane Housing it was key for growth, and although it is not right for every charity, it was for them.
He said if a charity has a model that fits the requirements, then “absolutely I think it is the right thing to do, because ultimately there is a massive increase on the impact of what you do”.
Graham said: “I don’t think it is necessarily right for every charity. It depends what your business model is, it depends on the robustness of the income stream and it is very different from a grant or donation. You have to able to show you are repaying a percentage of interest, and how are you going to repay it at the end of the term.”
In June of this year, Golden Lane Housing launched its bond via Retail Charity Bond Plc, a vehicle set up by Allia to issue bonds on the London Stock Exchange. Due to strong demand, the offer period of the bond had to close early and £11m was raised in less than two weeks.
Graham said that the bond has enabled 120 people with a learning disability to live in high quality housing, who otherwise could be living in “pretty awful settings”.
Ethical investment
Responding to a question raised by an audience member on ethical investment and the recent attention it has drawn from programmes such as BBC’s Panorama exposé on the investment policy of Comic Relief, Phil Caroe, chief operating officer of Allia, said that charities need to ensure fund managers know that they want their money invested ethically.
He said: “If you as a charity want your money to be going to something that is socially beneficial than you need to make sure your fund managers understand that or you will find yourself in a bad position.”
