The funding aims to deliver on the objectives set out in the Community Enterprise Growth Plan, targeting organisations addressing social problems in underserved places and communities.
The UK government has published its dormant assets strategy, which sets out its ambitions to extend and multiply the impact of the Dormant Assets Scheme. The government has confirmed that £87.5m (€103m) has been allocated to grow social investment in underserved places and communities.
The scheme was first established in 2011 to enable UK businesses to voluntarily transfer dormant assets – financial assets left untouched for long periods of time – to an organisation with operational independence of HM Treasury, the UK’s economic and finance ministry, which administrates the scheme.
If the scheme’s administrator is unable to reunite owners with their money, it distributes these assets to social impact wholesalers such as Access – The Foundation for Social Investment (Access) and Better Society Capital (BSC), to invest into grassroots organisations, including social enterprises and charities.
Supporting communities
The new funding will deliver against objectives set out in the Community Enterprise Growth Plan (CEGP), which was recently developed by a coalition of partners from the social investment and social enterprise sectors and backed by business organisations, civil society and philanthropy. The plan’s aim is to improve the financial resilience of community-based businesses, social enterprises and trading charities that are taking entrepreneurial approaches to tackling social problems in communities most affected by long term economic decline.
Access, a key partner in the coalition, said it was working closely with other partners to deliver against the strategy and would launch a consultation to support the implementation of the plan later this week.
“Access was one of the founding members, and we’ve worked collaboratively with partners to develop the plan and pitch to government ahead of this release of dormant assets,” Seb Elsworth, CEO of Access, told Impact Investor.
The consultation will run for a period of six weeks, inviting input from the social investment market and the wider voluntary, community and social enterprise (VCSE) sector on how best to deliver against the plan’s established priorities.
“The next phase is about ensuring that communities across the country benefit equally from it and delivering growth in places affected by long-term economic decline. This means building on the investments made to date, introducing innovative approaches and targeting the flow of finance to places and communities that may not have benefitted in the past,” said Elsworth.
Dormant assets for social investment
Dormant assets have been critical in growing the UK’s social investment sector from £830m in 2011 to more than £10bn in 2023 and, according to Access, the new funding will enable thousands of trading charities, social enterprises, co-operatives, and other community enterprises to benefit from the Dormant Assets Scheme.
Alongside dormant assets, the CEGP will also seek to leverage private investment and philanthropic finance to deliver significant change at pace, which is expected to double the amount available to communities.
Speaking to Impact Investor, Stephen Muers, chief executive of BSC, which was launched in 2012 with capital from dormant bank accounts, said the impact of the Dormant Assets Scheme on driving social impact in the UK should not be underestimated.
He said his own organisation has received £425m in dormant assets during its lifetime and that with an additional £200m from four of the UK’s major high street banks, has been able to increase funding to £1bn in investment commitments through the reinvestment of profits.
“And we’re still going. That £1bn has also attracted co-investment from others, which is several times that number,” he said.
“The social investment market has grown ten fold since we were set up and that’s not just down to dormant accounts but it’s been a really important driver.”
Investment focus
The CEGP has a three-pronged approach that includes delivering tailored enterprise support, increasing the availability of affordable and flexible finance, and building a robust and equitable social investment market.
Access said investment will be focused on those most at risk from long-term economic decline with at least 50% of investment targeted in the most deprived 30% of neighbourhoods and at least 25% in the most deprived 10% of neighbourhoods.
Elsworth said the organisations likely to benefit often operate in areas with deep-rooted social challenges and limited access to mainstream funding.
“Targeted social investment helps to address local inequalities, supports inclusive economic growth, and empowers communities by enabling local organisations to scale their impact where it’s needed most.
“Without this allocation, many high-impact initiatives in disadvantaged areas would struggle to survive or grow,” he added.
Funding allocations already announced include £12m to catalyse social investment opportunities for black and ethnically minoritised communities via Pathway Fund, an impact investment wholesaler dedicated to catalysing opportunities within these communities. And at least £12.5m will be directed towards enabling organisations that support improved youth outcomes to build resilience and expand their impact.
