Posted on 15th October 2009
The Lloyds TSB Foundation for Scotland is suspending its grant-making activities for the foreseeable future following the announcement that Lloyds Banking Group, which funds the foundation with a share of profits, will make no money this year.
This will effectively wipe out the foundation’s income for the next few years and put hundreds of charities and their services at risk.
The foundation will honour existing funding agreements, including multi-year awards, and will make final awards in December as planned.
Mary E Craig, chief executive of the foundation, said, “Scotland’s charities will lose out on at least £6m a year. We know that for some, this means not just putting the services they offer under threat but their future viability too.”
Negotiations over funding between Lloyds Banking Group and the Lloyds TSB Foundation for Scotland have so far failed. The banking group has offered the foundation almost £25m in funding over the next four years but would also permanently reduce their share of profits by half. As part of the deal the group would also gain greater control over where grants are made, and would be able to appoint its employees to the foundation’s board.
Craig said, “Our legal and financial advisors have informed us that what has been offered is not in the best interests of the foundation and that trustees should therefore not agree to this.”
Lloyds TSB Foundation for Scotland is one of four foundations in the UK that receives a share of 1% of the Lloyds Banking Group’s pre-tax profits each year. The other three, England and Wales, Northern Ireland, and the Channel Islands foundations, are still in talks with the bank over the deal.
A statement from Lloyds Banking Group said it has sought to involve Lloyds TSB Foundation for Scotland in the discussion it is having with the other foundations: “Our intention is to agree with all four foundations, a mutually satisfactory accommodation which is realistic, fair and durable.”
The bank said the current negotiations are about agreeing a proposal that leaves the foundations' independent status “very much in place”.
Lucy McTernan, deputy chief executive of the charity membership body the Scottish Council for Voluntary Organisations, refutes this. She says, “The Lloyds Banking Group’s move to curtail this important independent foundation is wholly unacceptable, not least as it is now a bank which is almost half owned by the taxpayer.”
Since 1997, the Group has given over £390m to the four Lloyds TSB Foundations, including £75m to the Lloyds TSB Foundation for Scotland.
Lloyds TSB Foundation for Scotland has given over 12,000 grants to charities totalling almost £85m, since it was established in 1985.
