Scope and Centrepoint are among the latest charities to have signed up with Allia, which has opened a new round of charitable bonds this week.
The bonds raise money through a fixed-return saving scheme that releases an up-front grant to a saver’s chosen charity.
Allia’s five-year bonds offer up to 10 per cent return on maturity, and will release up to 15 per cent of the amount invested as a gift to charity, depending on the rate of return chosen.
Savers can choose from the list of charities registered with Allia or they can suggest a charity they’d like to support.
One of the latest charities to sign up is disability charity Scope. Tom Hall, head of philanthropy at Scope, says:
“The Allia charitable bond is a fantastic way for charities to generate unrestricted grant income through a safe social investment.”
As well as opening its new round of bonds this week, there has been the launch of an independent review of Allia’s charitable bonds by New Philanthropy Capital.
The review looks at the benefits and risks of the bond model for both funders and charities.
The report concludes that Allia’s charitable bonds are a useful tool to encourage “urgently needed” unrestricted funds into the charity sector. It adds that the bonds allow charities, which may not be able or ready to do it alone, to engage with social investment.
However, it also concludes that charities should be aware that a considerable number of bonds needed to be purchased if they want to raise a significant income from it: “Charities should be aware that on average, between £5 and £9 of bonds need to be raised to generate £1 for the charity,” the report says.
Allia has raised £17.8m through its bonds to date from a mixture of individual and corporate investors. In the last year alone, £7.4m was raised releasing over £1.3m in donations to charities.
Positive impact on funding
Meanwhile, figures released by Rathbone Investment Management this week, finds two-thirds of trustees believe charitable bonds have the greatest or second greatest positive impact on funding.
These figures are based on survey response at Rathbones’ second annual Charity Symposium held on 7 September 2011, attended by 275 hundred trustees from a broad range of UK-based charities and foundations.
Some 34 per cent of delegates at Rathbones’ annual Charity Symposium felt the outlook for the sector was positive compared to 30 per cent whose outlook was broadly negative.
While 24 per cent felt government cuts were the greatest threat to funding, this was eclipsed by concerns over market volatility, deemed the greatest threat by 28 per cent of respondents. Reflecting economic uncertainty in the broader population, 25 per cent feared lower public donations would have the largest impact on funding.
Some 54 per cent fear that scrapping cheques would have a negative impact on their charity.
