MARK McLAUGHLIN
Edinburgh Evening News
3 March 2010
IN ANY battle there is always collateral damage and the current row between The Lloyds TSB Foundation and the banking behemoth that shares its name is no different.
While the Foundation goes head-to-head with Lloyds Banking Group over a bid to force the Foundation to accept a 50 per cent cut in its funding stream and greater corporate oversight, hundreds of charities stand to lose vital cash which currently funds jobs and provides support to some of the region's most vulnerable people.
The foundation has provided more than £2 million to Lothians charities in the last five years alone, and while the continuation of existing awards has been assured, all new grant applications have been suspended pending a resolution of the dispute.
At the core of the problem is Lloyds Banking Group's decision to end a legal requirement to pay the foundation 1 per cent of its pre-tax profits - established 25 years ago when TSB demutualised to appease savers for the loss of their bank.
The argument could not have come at a worse time for the region's voluntary sector, which is already facing cuts from all four local authorities dealing with funding crises of their own.
The future of Penicuik YMCA is already uncertain as it waits to find out if it will be one of the victims of Midlothian Council's £3.5m cuts this year. It now stands to lose one of its youth workers, whose salary is funded by a £24,000 foundation grant.
Director Keith McIntosh said: "Midlothian Council is our core funder, providing us with around £45,000, and while the foundation funding is an add-on it doesn't mean we take the loss of this funding stream lightly.
"It could result in the end of one of our projects or the closure of a building."
The Lloyds TSB Foundation specialises in funding individual projects, rather than core funding, so charities do not rely upon foundation money to keep their operations afloat. But in some cases these individual projects have the potential to influence hundreds of lives, such as the £12,500 provided to Carers of East Lothian to pay the salary of a carer support worker.
Centre manager Tony Segall said: "Our support workers offer help and advice to those caring for sick or elderly relatives, and often provide respite when they need some time away. The foundation has been paying for one of our nine support workers.
"The woman who currently occupies this post is understandably very worried about her job, but it's not just about her. Over the course of the year she's provided support for maybe up to 100 carers, who will have to go without that support if we can't find alternative funding to fill this role."
Jobs are also under threat at Loanhead Community Learning Centre - a home for more than a dozen organisations such as disability groups, school groups, mother-and-baby groups and leisure facilities such as dance classes.
Centre manager Irene Hogg said: "We have an award of £32,100 over three years to help pay for our development worker, who helps the organisations that use the centre reach their full potential and brings other organisations to the centre.
"We had hoped to apply to the foundation for more funding to keep this position going.
"The foundation is well known for funding salaries, so there is a worry that losing their money may mean jobs are lost in the voluntary sector, and with them the ability to deliver services people rely on."
Epilepsy Scotland faces the loss of its national epilepsy link officer, who arranges public information events throughout the country, including Edinburgh and the Lothians.
Communications manager Allana Parker said: "Epilepsy Scotland will now have to look at other trust and foundations for a grant for this post. Many are giving reduced amounts or nothing at all to charities this year, so it will be difficult to raise this shortfall in the current economic climate.
"It's hard times when charity fundraising has to subsidise much-needed services to vulnerable people with epilepsy."
Edinburgh Cyrenians was the recipient of the one of the largest single grants in the last five years - £186,000 towards the salaries and running costs of a West Lothian drug outreach project.
Despite the loss of funding, CEO Des Ryan supported the Foundation's stance.
He said: "The foundation is not and should not be allowed to become simply an outlet for the 'corporate social responsibility' of the banking group.
"The immediate loss of income will hurt many small to medium charities in Scotland who had been looking to the foundation - including my own - but I fully support their stand against writing off their independence."
Despite posting a £6.3 billion loss last week, Lloyds Banking Group said potential future profits of the newly merged operation are now too large to allow them to siphon off 1 per cent to charity.
It offered the Foundation 0.5 per cent of the group's profits and demanded a greater say in the foundation's affairs.
Sister foundations in England and Wales, Northern Ireland and the Channel Islands accepted the deal, but the Scottish foundation said no.
The bank has now given the foundation nine years' notice of the cancellation of this covenant - effectively cutting all ties between the two - but the foundation's shrewd chief executive, Mary E Craig, maintains it has nothing to lose by going it alone.
Ms Craig said: "At the end of the day we will still receive a full 1 per cent of the profits when Lloyds Banking Group starts making money again, which for an organisation of that size should be well within the nine-year notice period.
"That will be double the amount the other foundations will be receiving in that time.
"In addition, the Foundation also owns 15.7m limited voting shares that will become ordinary shares when the covenant ends. We will be able to sell those shares to give us a large pot of cash at the end of the nine years to keep us going for the foreseeable future.
"But most importantly, we will keep our independence. Even if we accepted the LBG deal there's no guarantee that we would be able to keep funding many of the charities we've helped in the past, as the deal includes a clause which says all donations must fit in with LBG's 'corporate objectives'.
"These objectives will include charities that offer financial literacy or budgeting advice - something we already do through our funding of Citizens Advice Bureaux and Money Advice Centres - but probably won't include a Lothians community centre running a daily lunch club."
Lucy McTernan, deputy chief executive of the Scottish Council for Voluntary Organisations, called LBG's severing of ties with the foundation "a shameful decision".
She added: "Voluntary organisations in Edinburgh and the Lothians are facing really tough times at the moment.
"Demand for the services they provide, such as homelessness support and getting people back to work, have been rising rapidly for the last year, yet income has fallen significantly.
"The recession means that grant funding from trusts is drying up and local authorities are looking to the voluntary sector as an easy target for cuts."
WORTHY CAUSES
IN the last five years, the Lloyds TSB Foundation has paid out £2,290,550 to voluntary organisations in the Lothians.
This has ranged from £197,571 awarded to Midlothian Young People's Advice Service in 2005 to support the running costs of the SMART project, working to support young people and their communities in relation to drug and alcohol issues, to £724 to purchase a digital camcorder for the Bonnyrigg & Lasswade Seniors Forum.
Children's charity Children 1st has received the largest share of Foundation grants over the last five years - more than £200,000 in all.
Most of the grants have been awarded to fund the salaries of voluntary workers but they have also gone to fund lunch club meals, adventure holidays for the disabled, trips for at-risk and disadvantaged youths, special needs tricycles, a riding pony for the disabled, IT equipment and church hall refurbishments, among other worthy causes.
CORRECTION: * IN A feature on Wednesday, we reported claims that the Lloyds Banking Group had insisted that "all" future donations from the Lloyds TSB Foundation for Scotland must "fit in with LBG's corporate objectives". We have been asked to make it clear that LBG only asked for a minority of funded projects to be aligned to its broad objectives such as matched giving by staff.
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