Motability Operations has made the decision to donate £800m to Motability’s endowment fund.
The donation comprises Motability Operations’ entire profits for the year, plus the release of capital reserves of £370m announced in June.
This brings the capital reserve £370m below the September 2018 balance sheet position.
In a statement announcing the news, Lord Sterling, chairman of Motability, said: “The endowment fund, which will be called The Motability Foundation, will enable us to substantially extend and sustain our current grant-making programmes and introduce new initiatives, taking into account industry capacity and additional resource, for example the need for highly trained specialist staff.”
He continued: “This donation was made in addition to investing in initiatives which improve the service and package offered to Scheme customers, including a £100million release to support customers. Since 2008, Motability Operations has invested £1.37billion in initiatives to support customers, such as free and subsidised vehicle adaptations, subsidised Wheelchair Accessible Vehicle pricing, alternative transport such as taxis or hire cars when a Scheme vehicle is off the road, and payments to customers when they return their vehicles in a good condition.”
The endowment fund was initially announced in June of this year, in order to help provide a long-term insurance policy for beneficiaries and their ongoing mobility needs.
Sterling added: “The endowment fund will help us to continue to enhance the lives of disabled
Commenting on the funding, a spokesperson for Mobility Operations detailed how as reserves are not in cash, it has borrowed on the financial markets to make the donation.
The spokesperson said: “Since capital reserves are not held as cash, but are used to purchase cars, the business has had to borrow on the financial markets to put the release into effect. Motability Operations does not end its financial year until 30 September, so a final top-up donation may be made before finalising and publishing the financial results in December, at which point the precise profit position is ratified.”
While in accounting terms the donation requires Motability Operations to record a loss this year, it confirmed that this does not affect the business’s ability to meet its liabilities, and it “remains in strong financial health.”
Sir Stephen O’Brien, chairman of Motability Operations concluded: “We are pleased to be making this substantial donation which will help Motability improve the lives of many more disabled people. The Board is confident that following the rebasing to this revised capital position, and the donation of this year’s profits, the business remains robust, affordable for customers, and sustainable for the long term.
“In planning the donation, we have sought a balance between additional support for Scheme customers and seeking opportunities to improve the lives of a wider range of disabled people through donations to Motability, the Charity.”