Bank that likes to help

Circus Space was loaned £250,000

A not-for-profit bank sounds something of a contradiction, when you think how much the big High Street institutions make every year.

But a year after it was launched the Charity Bank is doing excellent business.

The idea is to encourage well-off people to invest in it and then to lend the money to charities that need help.

In its first year, it has loaned £5.5m to more than 250 charities.

Many of these organisations might have struggled to get funding from ordinary banks and lenders.

Big difference

"The important thing about this particular market place is that quite small amounts of money can make a big difference," explains Charity Bank chief executive Malcolm Hayday.

One example is Circus Space, based at Hoxton in east London.

Teo: Building was a wreck

It runs training courses in circus skills for both professionals and the local community. It's one of the top circus schools in Europe.

It has borrowed £250,000 to buy and convert an old electricity generating station into its home.

"We have a building that was a complete wreck when we first came here," says chief executive Teo Greenstreet.

"We spent a lot of time redeveloping it and helping the regeneration of this whole area.

"What we need is a long lease on the whole site to ensure we have a long-term future. Without the long lease we are under threat and our trustees were really concerned about that.

"I don't know what we would be doing if we didn't have the Charity Bank."

Circus Space now takes on corporate clients

One knock-on effect of that new stability is that Circus space now also offers companies the chance to pick up Big Top skills.

In fact, it's those spin-offs that are one of the bank's big achievements.

A loan to an organisation can lead to the creation of jobs and wealth in a community.

With 180,000 registered charities in England and Wales alone, there's no shortage of applicants.

Generate income

Malcolm Hayday says sustainability is important; a project must have the ability to generate income and repay the money over a period of time.

So what do the investors get out of it?

They benefit from the new Community Investment Tax Relief Scheme, which is worth up to 25% of the money invested spread over five years.

Malcolm: Focused on savings and loans

Accounts with the bank also pay up to 2% gross interest, although customers can waive this if they wish to make loans more affordable to borrowers.

"We are not in the market for cheque books, credit cards etc. We are very much focused on savings and loans," says Malcolm.

And who are the bank's investors?

"People who are sharing in a common view that in today's low inflation environment, there is something very positive they can do with their money."