“When working in the mainstream banking environment, you see that charity customers are very different from corporates. Their banking needs are different, their financing needs are different, and the way that they are run is different,” says Taylor. “There’s relatively little overlap between a large charity that's run akin to a company and the small charities run by volunteers from a kitchen table. In either case, their needs will not be in line with those of a standard business banking corporate customer.”
Taylor points out that the often automated and digital world of business banking does not always sit well with charity customers and was never built around charity sector needs.
“Charities have come to us with the feeling that their existing banking relationship doesn't work for them as well as it used to, and that has been exacerbated by the pandemic,” says Taylor. “During this time, a lot of charities have tended to make more use of their telephone banking facility because they have wanted a conversation with their bank, and they need a personal service.”
CAF Bank has also seen more charities asking for lending and support. “This has been largely around that additional financing bridge in a year in which fundraising has been so difficult for so many of them,” she says.
For one sector of the charity community there has been an additional challenge around making international payments for the purposes of distributing humanitarian aid. “Within mainstream banks there is an elevated level of perceived risk attached to charities which are making international payments into high-risk jurisdictions, which is what many of them are set up to do,” says Taylor. Money-laundering and other governance issues are clearly a potential pitfall. “CAF Bank and our parent, Charities Aid Foundation, has a real specialism in meeting those needs,” she says. “Our charities expertise combined with our Global Alliance of offices provides us with a rich foundation to understand and validate international movement of funds.”
But this has been a period of huge upheaval for charities across the board. At the beginning of the pandemic, CAF and CAF Bank launched a ‘Survive, adapt, thrive’ campaign which was aimed at helping charities endure the huge change they were about to encounter, draw breath and understand what they needed to do next to adapt to the prevailing circumstances then flourish in a post-pandemic world.
“We had an enormous amount of interaction with charities at that time,” she says. “They needed a different type of support to help them understand how to manage their finances better, what other streams of funding they could access, and how to access support when applying for grants. We ran some excellent grant programmes including the CAF Emergency Fund, and we combined with some of our corporate and private donors to produce the CAF Resilience Fund that was match-funded by the Department for Digital, Culture, Media and Sport. Our experience of working with both philanthropists and corporate donors via our dedicated management teams galvanised delivery of these funds: we have distributed the first £20m through that scheme across all segments of the charity sector in the UK.”
In addition, CAF Bank has run some private donor grant programmes, and worked with charities across the global alliances of CAF affiliated organisations to access new donor pools. “The philanthropic response to the pandemic has been fantastic in the UK and there is an even greater culture of philanthropy in the US, so we work closely with our colleagues in CAF America. In fact, UK charities are the largest overseas recipients of funds from CAF America, and never more so than during this last year,” says Taylor. “That has been a great programme of work that we look to expand on over the next few years as we work with both donors and charities to maximise their impact.”
Nevertheless, many charities – like companies – are having to have difficult conversations with their bank. Taylor explains that at the beginning of the first lockdown, CAF Bank proactively offered all its borrowers a six-month capital repayment holiday – without knowing whether six months was the right term. About one-quarter of its customers took CAF Bank up on that offer and nearly all of them are now able to make capital repayments again. Those that cannot have been supported further. No CAF Bank customer is currently in default. Further support was provided by Social Investment arm CAF Venturesome, which supports charities unable to access traditional repayable finance.
“Having proactive conversations with clients early on really helped,” she says. “We could then explore all the different options. They might need to adapt and increase fundraising or unlock reserves, for example, temporarily repurposing funds to combat the pandemic. We participated in the CBILS scheme so that we could offer that. In the end, we haven't had an enormous rate of take up of the CBILS scheme, but it has been a fantastic support for some charities.”
Of course, some charities are inevitably facing some really difficult challenges, have used up their reserves, are struggling with income generation while demand for their services is going up. Others have been net beneficiaries of this situation, have actually been able to increase fundraising or have accessed new grants. Generalisations simply do not work in the charity sector.
“It’s quite a mixed picture. Often the larger, better established and more professionally run charities can do quite well in a disaster scenario. It can be the smaller ones without strong infrastructure around them for whom it's a struggle,” she says. “At CAF we are committed to supporting the sector to build resilience through strong and robust governance structures right across the size spectrum.”
But so much would be lost if the charity landscape just comprised household names. “I think it's important that there is a landscape that enables both large and small charities to thrive and, if we were to see a greater rate of merger during the pandemic, I think we may lose high calibre organisations that are doing great things for society,” she says.
CAF Bank operates at the intersection of donors and charities. It can bring together charities in need with donors who are seeking to support specific causes. It is this approach that assists smaller charities with resilience, enables longevity and preserves the small charity landscape.
What is vital, says Taylor, is that a charity can tell its own impact story, and for it to seek funding through multiple channels. She urges charities to seek out and learn digital fundraising capability, and to build the infrastructure to do it successfully going forward.
Perhaps most importantly, CAF and CAF Bank have an advocacy role. It speaks to government, to all tables of power, about the role of civil society and how connecting charity with the private and public sectors really makes things happen.
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