Raising money from private individuals - loans

davey_browning

I am associated with a charity in Scotland and they are looking to build some additional accommodation for staff. There has been some discussion about possibly raising money for this by way of asking supporters to lend the charity money and then having an agreed payback schedule with interest, basically like a mortgage. I was involved with a charity in Canada years ago who did something similar and I wonder if this is possibly in the UK and specifically Scotland?

Essentially say you had 10 people all give £20k each and there was an agreed interest rate and the money was paid back over say 10 years. Each month each lender got a payment back and at the end of the 10 years the loans were paid off. They could be secured against the accommodation that was being built or against other buildings the charity has.

Possible in the UK? If so how would you go about organising this? 

Thanks 

Savvy_Sue

If the charity is registered in Scotland, then that's where you need to be asking the question. https://www.oscr.org.uk/

Be prepared for a not particularly rapid response (although maybe they are better than south of the border). 

I found this page: https://www.oscr.org.uk/becoming-a-charity/need-help/ and that points you to other sources of advice, including with charity law and accounting. Through SCVO you may be able to get some pro bono advice. 

I guess the biggest question would be how you can guarantee repayment in an uncertain world. You may need help to examine the worst case scenarios - builder goes bust before the work's completed, problem is identified meaning costs quadruple, scandal hits the charity etc etc etc.