One of Scotland’s biggest donors to charities, the Lloyds TSB Foundation, fears it will make its last donations next month following the failure of the foundation yesterday to reach agreement with Lloyds banking group on future funding.

At a meeting between the foundation and the bank in London, the Trustees, who donate about £6 million a year, said that the bank had made no substantial change to future funding plans which have already been rejected.

Alongside similar foundations for England and Wales, Northern Ireland, and the Channel Islands, the Scottish charity has since 1985 received a share of one per cent of Lloyds’ bank profits and has made 12,000 donations worth about £85 million. But it has been turning away requests for donations in 2010 and after next month it has no more money to distribute.

This year, as a result of the financial crisis, the bank proposed to cut the profit share to 0.5 per cent, and to put its staff onto the board of Trustees, which the Trust said would turn the charity into a marketing arm of the bank. If the proposal was accepted, the bank said it would give the foundation £25 million over four years to bridge the period in which no profits are expected to be made.

Last night, after the meeting with the bank’s bosses, Mary Craig, the Scottish foundation’s chief executive, said: “Regrettably the banking group’s proposal has not changed substantially and remains unacceptable to the foundation on the basis of legal and financial advice.”

The foundation has maintained that Lloyds’ claim that, following the takeover of HBOS, the charities would be getting a smaller slice of a bigger pie, is untrue. A Lloyds spokesman said: “Under the accommodation we are seeking, we would continue to be the largest banking contributor to good causes in the UK.”

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