£11m blow to charities working with deprived

THE BARINGS CRASH BARING FOUNDATION

IAN MacKINNON

The bank's collapse will cut charities off from donations of more than £11m a year.

The Baring Foundation, a charitable body which owns all the bank's non- voting ordinary shares, had an income of £13.7m last year, which it distributed to mainly voluntary sector programmes.

The bulk of that income, £12m, came from the dividend on the bank's shares and a slice of the profits. The rest came from £50m of other investments which ensured the foundation was not wiped out with the bank and will enable it to meet commitments in coming years.

However, a senior analyst of the charity sector said yesterday the major significance of the foundation's near decimation came not from the loss of its cash, representing less than 1 per cent of donations from charitable trusts, but from the lead it gave in the distribution of its grants.

Luke FitzHerbert, editor of the Guide to Major Trusts, said the foundation had played a leading role in transferring the emphasis of charitable giving away from traditional areas like teaching hospitals and schools to the voluntary sector in socially deprived areas.

In one initiative the foundation targeted a proportion of its aid to projects in Merseyside and the North-east in the hope that other London- oriented trusts would follow suit. London itself later became a target area, with plans in the pipeline for Scotland to follow.

It is voluntary groups in areas like Merseyside, which benefited from £1m in small one-off donations last year, that will miss the money most. The foundation also gave $600,000 (£380,000), its largest donation in 1993, to Marie Stopes International for use around the world.

But David Carrington, director of the foundation, said all charities which had been promised money in programmes of up to four years had been assured they would still get the cash.

The foundation's council of management would be meeting within the next two weeks to decide how this would be achieved. This might mean altering its £50m investment portfolio - presently designed to produce high-growth, low-earnings - to yield more money, Mr Carrington said.

But Nigel Siederer, director of the Association of Charitable Foundations, of which Baring is a leading member, said the crisis raised questions about foundations maintaining so much of their assets in one particular area.

Mr Carrington said this strategy was necessary because of the foundation's formation and it had produced a rapid rise in income from £8.7m in 1993. He also saidthat in recent years the foundation's other investments outside the bank had been rising rapidly.