Lloyds charity looks to major donors for £12 million lifeline

Published on Thursday 12 November 2009 21:21

THE charitable arm of Lloyds Banking Group announced yesterday it wants to raise £12 million from major donors to save itself from closure and continue funding charities across Scotland for the next two years.

Talks in London between Lloyds TSB Foundation for Scotland and the banking group aimed at resolving a high-profile bitter funding dispute broke down last week.

The banking group has said it wants to cut the foundation's annual income by half – resulting in a loss of 6m a year – due to the current financial crisis.

The foundation had been offered an interim funding package but in exchange had to agree to its income being reduced from 1 per cent of the banking group's annual pre-tax profits to 0.5 per cent and accept a banking director on its board.

Last night foundation chief executive Mary Craig said the cash appeal should not be interpreted as "letting the bank off the hook".

"We're being realistic," she said. "What is needed is a bit of breathing space which will allow us to fulfil our main objective of allowing funding to charities to continue while we try to resolve the situation.

"We are only too aware that many charities will be unable to make plans for the year ahead, or indeed continue to deliver some of their services, until they have certainty around whether they can apply to us for grants. It is with those responsibilities firmly in mind that, as an independent organisation, we are starting to explore alternative routes to funding until the banking group returns to profit and we again receive monies through our covenant.

"Our aim has always been to maintain our support to charities and protect our grant-making work with grassroots charities. That is why we have repeatedly rejected Lloyds Banking Group's proposal to renegotiate our covenant as that would lead to our funding being cut by 50 per cent over the longer term.

"Our last planned awards will be made in early December. I hope that, by that time, we will have secured offers of funding from major donors and other sources of potential monies."

Lucy McTernan, deputy chief executive of the Scottish Council for Voluntary Organisations, said: "It seems absurd that the bank can afford to shell out 80m in sponsorship of the London Olympics, and yet they claim they can't find 6m for the foundation."

Liberal Democrat MSP Robert Brown said: "Lloyds TSB must now step up to the mark. The taxpayer has kept them afloat and the Scottish public rightly expect them to give something back."

A spokesman for the bank said all four regional foundations, including the one for Scotland, were offered a "durable and fair financial settlement".

"There is no reason for the foundation to suspend its grant-making programme.

"We have made an offer which, if accepted by the foundation, would ensure that it receives a major financial contribution in both the short and medium term.

"That offer by the group, the foundation's only main donor, is designed to ensure that the foundation can meet its commitments to Scottish charities."