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Pre-funding of fundraising

Types of loans which help meet fundraising targets in the short term - a type of social investment

What does it mean?

Charities and social enterprises often fundraise for large building or refurbishment projects. The problem with such fundraising initiatives is that it is often hard to raise the full amount before the cost of the project goes up. So typically, the last 20% is hard to complete. This type of facility enables the project to commence and the loan is repaid through future fundraised income. This is also known as “last brick” financing.

Who might use it?

An organisation which relies on fundraising will be able to utilise this facility as income can be ‘lumpy’ whilst expenditure has a more consistent pattern. The pre-funding facility does not have to be drawn down and interest will be paid only on the funds used. This facility is similar to a bridging loan; it “bridges” to future fundraised income instead of grants and contract payments.

An example of this is when an organisation is fundraising for a new building, and requires a bridging loan to enable it to proceed as it wishes to take advantage of a fixed contract price for building work.

Who provides it?

  • CAF Venturesome offers pre-funding of fundraising between £25,000 and £250,000 specifically designed to meet the needs of small and medium sized charitable organisations.
  • Charity Bank can provide underwriting facilities for fund-raising programmes from £50,000 up to £2 million.
    Unity Trust Bank offers pre-funding of fundraising up to a maximum of £50,000 for grants.

Case study - St Peter's Church

St Peter’s Church in the heart of Notting Hill is a vibrant, busy church with a diverse congregation. Running a multitude of services for the local community, St Peter’s offers care groups for small children, parenting classes, music events, study groups and other outreach programmes.

The Grade II listed church was in need of a great deal of renovation. Lack of suitable facilities to host programmes, unused space and absence of suitable disabled access to the building all posed problems – and St Peter’s were keen to address these issues to ensure that they could continue to deliver the best services possible for their parish.

When St Peter’s launched an appeal to help raise the £1.2 million needed to renovate the building, CAF Venturesome offered advice on a fundraising strategy and provided a loan of £250,000 to bridge to future fundraising. Financing some of the work in this way allowed St Peter’s to plan with more certainty in the early stages of the renovations.

 

Page last edited Oct 22, 2015

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