Plans for £165m of dormant assets funding

09 Aug 2018 News

The government has announced it will unlock £20m of new money from dormant charitable trusts, to be given out in the sector, in today’s civil society strategy.

The strategy also includes plans to establish two new institutions to give away £145m of money from dormant bank accounts. That money will be spent on youth services and financial inclusion. It was originally announced last year, but the government has now provided more details on how it will be spent.

But there is no clarity about a much larger pool of money from dormant assets such as stocks, insurance and pensions, which is estimated to be worth £2bn, and is earmarked to be spent in the sector.

£20m from dormant charitable trusts

The government commits to unlocking £20m from dormant charitable trusts, which spend less than 30 per cent of their annual income, to support community organisations over the next two years.

The work will be carried out in conjunction with the Charity Commission and UK Community Foundations.

UKCF says that it has already been working with the regulator to identify charities which are not active in their spending, and that these charities will be approached to understand why they are not spending.

Vicki Papworth, director of programmes and development at UKCF, told Civil Society News that the approach will not force charities to hand over money.

“If you’re building an endowment or saving for a capital project, no problem, we’ll go away,” she says.

The money will be pulled into a central endowment, and will be allocated depending on which cause areas and locations the original charity was working in. Some will be held centrally.

“UKCF is currently designing a process to distribute the cash,” Papworth said. “At present, it has not been decided whether there will be an open application process.”

She said UKCF is looking at how the money might be best spent. This could well include a focus on core costs, and on “cold spots” where little grant capital is distributed.

£145m of dormant accounts money

The government announced several months ago that it was unlocking £330m of dormant accounts cash, of which £145m would go to combat financial inclusion and help youth organisations. It has now said it will set up new organisations to manage these funds.

The report says: “The government will allocate £90m to an ambitious youth initiative, delivered by a new organisation which will operate independently of government. This organisation will have at its heart ensuring that major employers and social sector organisations work together to help the most disadvantaged young people transition into work.”

It also says: “The government will direct funds for the establishment of a new financial inclusion organisation responsible for deploying £55m of funding from dormant accounts. It will primarily address the problem of access to affordable credit and alternatives.”

In both cases the new organisations will act primarily as distributors of funds to third parties, including charities, which are tackling these issues.

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