The capital will go to social enterprises providing support to those struggling with the cost of living crisis and back energy saving solutions. Local communities will have larger say over spending priorities via new community wealth funds.
UK social enterprises are set to receive a financial boost, following the government’s announcement that it would provide a new tranche of £76m (€86.2m) from its Dormant Assets Scheme to support those struggling with the cost of living crisis and back innovative energy saving solutions.
Since 2011, £892 million has been released through the voluntary scheme, which has redirected money left in forgotten bank and building society accounts to help support young people and those in financial difficulty, as well as generating social investment.
Charities and social enterprises will receive support from a £31m share of the new tranche, to be distributed by social investors Access and Big Society Capital. The remaining £45m will be distributed by the government-founded Fair4All Finance to beneficiaries including 69,000 people struggling with their finances that will receive no-interest loans.
The list of organisations through which funds will be channelled is also being expanded to include community wealth funds (CWFs), new structures designed to allow residents to improve their own communities. Decisions have yet to be made on how much funding will be awarded to community wealth funds, or how it will be delivered.
Community wealth funds
The creation of CWFs was hailed by the Community Wealth Fund Alliance, a group of more than 660 civil society, public and private sector organisations, which has lobbied to secure more funding for local communities in deprived areas via this type of vehicle. The alliance said the government now needed to ensure CWFs were designed effectively to provide long-term, community-led funding with appropriate confidence and capacity building support.
According to Stephen Muers, chief executive of Big Society Capital, funding from the scheme would also help leverage further social investment.
“The social investment infrastructure is already in place, meaning we will be able to deploy funds at pace. And because it catalyses private and philanthropic investment alongside, we can make this money go much further. For example, every £1 from the dormant asset scheme to-date spent on social investment has unlocked another £3 from other investors,” he said.
The Dormant Asset Scheme is due to be expanded in coming months to include participants from the insurance and pensions sectors, with further sectors such as investment and wealth management, and the securities sectors, due to join later. It estimated a further £880m could be made available through the scheme over time, £738m of that for England.
Following a public consultation, the government plans to focus on youth, financial inclusion, social investment wholesalers, and community wealth funds as the four target areas for the English portion of the Dormant Assets Scheme.
The scheme is operated by the government-owned Reclaim Fund Ltd (RFL), which holds enough money to cover any reclaims, while distributing the surplus to The National Lottery Community Fund for social or environmental initiatives.
Dormant assets remain the property of their owners, which means those owners could reclaim money owed to them at any time. To cover that eventuality, the scheme needs to match what the financial institutions would have paid to the owner had their assets not been transferred into the scheme.