CFG calls for action to protect access to financial services for charities working in fragile states

12th March 2015

CFG has released a briefing for charities (pdf) on the impact of de-risking actions on charities, based on meetings with charities and regulators, as well as a survey with CFG members carried out last year. CFG’s work has found that a number of charities have faced significant difficulties in securing access to appropriate financial facilities – backing up research by Demos and the Overseas Development Institute released earlier this year.

CFG has found that:

  • There are a large range of countries where charities are facing difficulties in accessing financial services, including a range of fragile states in Middle East, East Asia and Africa.
  • The majority of survey respondents had found that banks had become more risk adverse over the past few years.
  • Although in general, banks are taking proportionate actions to reduce risk but in some cases, charities are losing services due to disproportionate actions by banks.
  • A range of problems have been reported including international transfer being delayed or denied, funds being frozen, bank accounts closed and donations blocked.
  • These actions are having a material impact on the ability of charities to carry out vital humanitarian work in those places where it is most needed.
  • There have been some steps taken by charities to improve their relationships with banks, but CFG found that most charities had not proactively take steps to improve these relationships – particularly small and medium sized organisations.
  • Charities are finding other ways to transfer money and pay staff in order to reach those that need it, but these could are likely to be more risky than using conventional financial facilities – so it is important that charities are not forced into using these methods due to de-risking activities by banks.

The briefing includes a number of recommendations for banks, charities and governments on how to improve relationships and reduce the impact of bank’s de-risking activities.

Caron Bradshaw, Chief Executive of Charity Finance Group says:

“The impact of banks de-risking on charities in the face of growing regulatory pressure has been well documented and our work adds to the growing evidence base. We need action on this so that charities are able to continue their important work, particularly in providing critical humanitarian assistance. It is clear that this is not an issue that can be tackled by any one country, and we need to begin an international conversation on how we can develop consistent rules and approaches to protect access for charities to necessary financial services.”

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