In the wake of the credit issues facing charities after the well-publicised problems with Iceland’s banks Charity Bank has contacted charity leaders this week to try and step into the breach.

Chief Executive Malcolm Hayday wrote to the chief executives of NCVO, ACEVO and the Charity Finance Directors’ Group as well as the Charity Commission on 14 October, to advise that any charities struggling as a result of money locked up in accounts with Icelandic banks, may be able to receive support via a short-term working capital loan.

Says Mike Hicks, Head of Lending at Charity Bank: "Any charity that has funds stuck with Icelandic Banks, and is watching its cash-flow slowly drying up, is unlikely to be an attractive proposition to a commercial bank in current market conditions.

“We are part of the banking sector but as a charity we also want to be part of the solution.  We should be delivering on our mission and offering assistance to those charities feeling the squeeze as a result of market failure.”

Last week, The National Council for Voluntary Organisations reported that at least 60 of its members fear their funds may be at risk and it’s estimated that up to £120m of charity funds may be invested in Icelandic banks.

Adds Hicks:  “Charity Bank does not have unlimited funds to lend, and we will obviously need to conduct the usual due diligence to ensure that organisations have the capacity to repay.  But it is at times like these, when third sector organisations may be facing financial difficulties, that we should be there to help where commercial lenders may not have the appetite for the business.”

Charity Bank has itself seen a significant growth in loan enquiries in 2008.  By the end of September Charity Bank had received almost 600 loan enquiries – up 17% on a year ago – with a value of £128 million, itself a 34% increase on last year.

Organisations that are interested in discussing their situation further should contact the Loans Officer on 01732 774050 or by emailing enquiries@charitybank.org.