UK Charity Bank No Longer a Charity
Wednesday, 5th June 2013 at 10:32 am
The UK Charity Bank – the only operational bank with charitable status – has ceased to be a charity after moves by that country’s national regulator.
The UK Charity Commission says it has approved changes to the articles of Charity Bank so it is no longer a charity but which allow it to continue operating as a bank while securing its operations for charitable purposes.
“The requirements of the banking regulations mean that it is not possible for Charity Bank to continue both as a charity and as a bank, and it will therefore cease to be a charity effective as of close of business on 31 May 2013,” the Charity Commission said.
Charity Bank was registered as a charity in 2002 making it the only operational bank that had charity status. Its income for the last financial year was £4.9million. Charity Bank’s principal shareholder is Charities Aid Foundation.
“Our primary concern is the protection of charitable assets and ensuring that these are used for their existing charitable purposes. We believe that this approach is not only in the interests of the furtherance of Charity Bank’s former charitable purposes, but is also in the interests of charities that benefit from its services,” Chief Legal Adviser to the Charity Commission, Kenneth Dibble said.
“The consequence of a charity changing its articles in a way which means it is no longer charitable are that, under section 197(2) of the UK Charities Act 2011, certain property still must be used in furtherance of the charitable purposes of the former charity.”
Charity Bank says the change will allow it to respond to the growing demand for finance from charities and social enterprises by enabling the bank to raise capital from a wider community of investors aligned to the mission of the bank.
“Depositors and borrowers will see no difference. Our services, our rates, our lending process, our customer service, our staff and our management will all remain the same. The bank’s directors will continue their stewardship as before,” Charity Bank Chief Executive, Patrick Crawford said.
“This will enable Charity Bank to attract more savers and, as a result, to increase the number of charities and social enterprises which can benefit from its loans.
“To ensure that Charity Bank continues to focus on its mission to serve the charitable sector, its existing mission and charitable purpose have been enshrined in its amended articles of association.
“The lifeblood of a bank is its capital, and our change in structure will enable us to raise additional capital in order to address demand for loan finance from charities and social enterprises which would otherwise not be met.
“Charity Bank will continue to focus on lending to small and medium-sized charities, and to voluntary, community and social enterprises, supplemented by a small proportion of similar but larger organisations.