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9 July 2012
Social investment is set to grow significantly in the next few years, as charities seek vital funding during the tough economic climate, the Charities Aid Foundation said as it marked the first year of its innovative CAF Social Impact Fund.
Offering unsecured loans to charities and social enterprises, The CAF Social Impact Fund has offered £2.2m in loans to 22 charities, supporting thousands of vulnerable adults and young people in its first year, according to its first full year report.
The CAF Social Impact Fund enables individuals to lend charitable funds to support charities and social enterprises. When they repay the loan, this money is recycled again and again until it is returned to the supporter’s CAF Charitable Trust.
Village Water is one of the charities the CAF Social Impact Fund has helped. A charity providing hygiene and sustainable water to rural villages in Zambia, a £50,000 CAF loan has enabled 20,000 people to gain access to clean water.
Midi Music Company offers music lessons; industry recognised courses and music career advice to 2,500 children and young adults. It has a high success rate with many Midi students now working in theatre and music. The small charity needed a £36,000 loan to continue its work while waiting on the sale of some land. CAF Social Impact Fund was able to help after its local bank said no to a loan.
Wozzy Brewster OBE, Executive Director of The Midi Music Company said: "For the first time in our 17-year history we had problems with our cash-flow and needed financial help... The loan from the CAF Social Impact Fund has provided our charity with a financial lifeline".
International development charity iDE UK supports rural farmers in Africa to increase their annual incomes through the use of innovative micro irrigation technology. The £160,000 loan from CAF will help 6,600 farming families to increase annual incomes through the irrigated farms project.
Lewis Temple, Chief Executive of iDE UK said: “Things are really coming together now for iDE UK and the loan from the CAF Social Impact Fund has played a big role in helping us deliver our largest project to date in Ethiopia."
Stephanie Sturrock, Director of Social Investment at the Charities Aid Foundation, said: “Lack of appropriate funding is a major barrier to charities. In this economic climate, few charities have sufficient reserves to fund their activities in advance of promised funds and few have assets which can be used as security for commercial loans.
"Many charities and social enterprises need capital to finance new projects, access grants and contracts or to develop their work – exactly the ideas underpinning the Government’s vision of increasing social enterprise in a ‘Big Society’.
"The first year of our Social Impact Fund has shown how it can transform the work of charities by helping them expand or find new long term sources of funding.
"Social investment has huge potential to expand the work of charities and other organisations, and recycle money so it works harder for the causes people care about."