Charities - Funding for Property Purchase and Improvements

A recent survey of 474 charities surveyed for Charity Property Matters paint a disappointing picture. More than third of the charities (36%) surveyed believe that property possesses a high risk to their organisation. 30% of charities surveyed have said that property is a barrier to delivering their charitable objectives.

The report also highlighted the fact that 2/3 of the charities do not have a strategic property plan. Unfortunately, this finding confirms our experience working with the sector.  We find that the charities we work with don’t have the expertise either at the trustee level or within the organisation.  Often the charities relied on help from outside sources.  The survey found, 41% had no one specifically responsible for property within the organisation, 27% have experienced unforeseen property costs and 44% do not report regularly on property to trustees.  The survey also found, nearly a third do not have complete records of the property they own or rent.

The big change this year, compared to the previous surveys, is the higher proportion of charities now leasing property from private landlords or a commercial body. This creates additional problems to charities when renovating or upgrading a leased property. The lenders are reluctant to lend for upgrades or renovation. Recently a charity which had a 25-year lease found it very hard to borrow to upgrade its centre, the charity eventually raised the finance by organising fundraising events and donations.

Caron Bradshaw, CEO of Charity Finance Group, said “The findings make for sobering reading, with property being an increasing concern for our members, both financially and in terms of the risk it poses to their organisation”.

Antonia Swinson, CEO Ethical Property Foundation, commenting on the survey results said, “Property can make the difference between effective social mission delivery and a miserable time for everyone”.

Our experience working in the is sector is that charities with a property loan have had issues with both obtaining additional funding for improvements and moving to a better loan funding than the current agreement. We have seen instances where charities were tied into a longer-term agreement than an equivalent commercial lending agreement.

The Charity Property Matters survey was undertaken by the leading property advice charity, The Ethical Property Foundation in partnership with the Charity Commission. It is a bi-annual survey that has been published since 2012.

If you have any questions about anything mentioned in the article, do not hesitate to contact me at suda.ratnam@raffingers.co.uk or on 020 3146 1608. I am also on LinkedIn if you wish to connect.

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