Westminster heeds calls for help by digging into dormant accounts
Charities and social enterprises in England will benefit from £30m in new funding to help them through the Covid-19 pandemic, UK culture minister Oliver Dowden revealed on Wednesday.
The announcement comes after many weeks of campaigning, including warnings that half of the UK’s social enterprises could run out of cash by June without urgent help.
The £30m is going to Access - The Foundation for Social Investment, whose role is to help make England’s charities and social enterprises more financially resilient. As a wholesaler, it passes on money to social investors to distribute.
Up to £10m of the funding is for emergency support, and will be used within existing emergency lending programmes so that social investors working with Access can offer a blend of loans and grants rather than pure loans. This is expected to be available within “a number of weeks”, CEO Seb Elsworth told Pioneers Post. He said it was not yet clear how many social enterprises and charities would benefit from this.
The remainder of the £30m is for longer-term funding, and will be used to expand the range of financing tools available to the sector. This was in response to long-standing requests for a greater supply of more patient capital, said Elsworth, and may include equity-like or other long-term forms of financing.
A "vital" role
The new money for Access is part of a £150m package, which comes from speeding up the release of new funds and repurposing others from dormant accounts – bank accounts forgotten by customers for 15 years or more.
Of the £150m, the government has also pledged £65m to Fair4All Finance, to support affordable credit providers (of which £41m is new, and £24m has been released early); and £10m to the Youth Futures Foundation, to help organisations supporting disadvantaged young people into jobs.
The remaining £45m, confirmed in early April, went to Big Society Capital to help it set up a Resilience and Recovery Loan Fund, to ease access for social enterprises and charities to emergency loans.
Big Society Capital, Fair4All Finance, Youth Futures Foundation and Access Foundation were all set up with government money drawn from dormant account funds.
'We want to unlock hundreds of millions more pounds for good causes' - Oliver Dowden
This week’s announcements came during Wednesday’s government press briefing. In perhaps the first mention of social enterprise by any government minister since these daily briefings began in mid-March, Dowden said charities and social enterprises were “playing a vital role in our national effort against coronavirus” and that the funding would support organisations “at the heart of their communities”.
He added: “Through our proposals to further expand the dormant assets scheme, we want to unlock hundreds of millions more pounds for good causes.”
Social enterprise bodies welcomed the news. Social Enterprise UK CEO Peter Holbrook said: “Our members have told us that with the right blend, finance can play a role in getting them through this crisis and beyond into the recovery. That is why we worked with our partners in the sector to raise this issue with government and it is good to see the secretary of state responding with this additional investment.”
Holbrook added: “Social enterprises are mobilising communities right now to keep our country going through this crisis and want to play a big role in the national recovery. The more tools that government can give us now, the faster and better we can build our country back.”
Trading into recovery
In a statement, Elsworth called the government funds “hugely welcome” and said it “cements the role of blended finance in the social investment landscape. It will help more organisations to be able to use investment in the short term.
“Crucially, looking ahead, the sector will need a broader range of investment opportunities to help trade its way into the recovery. This boost of dormant account money will help make that happen and responds to the need which the sector has clearly articulated.”
Chair of the Access Foundation Nick Hurd – who is also a former government minister for civil society – tweeted on Wednesday: “The whole team at @si_access feel [a] strong sense of responsibility to make sure this money counts. Pleased that [government] realise the importance of a blended finance option for social organisations on road to recovery from #Covid19.”
'Our members have told us that with the right blend, finance can play a role in getting them through this crisis and beyond into the recovery' - Peter Holbrook, SEUK
The minister for civil society, Baroness Barran, said: “Since the crisis hit, charities and social enterprises have stepped up their response which has been vital to the national effort. Building on our unprecedented package of financial support for the voluntary sector, this additional funding through the dormant assets scheme will ensure organisations receive the right mix of investment, assisting the coronavirus response and recovery.”
Wednesday also saw a desperately awaited update on a £200m fund for small and medium-sized charities – part of a £750 government package for charities – which was first announced in early April, and which opens for applications tomorrow.
NCVO, the representative body for voluntary organisations in England, which has been campaigning heavily for emergency assistance, is continuing its appeal, arguing the initial £750m is “only a first step”.
The sector body tweeted yesterday: “It’s encouraging that the government has also today released £150m in dormant accounts money that will go further in tackling youth unemployment, addressing financial exclusion and growing the social investment market… This proves that there are more options worth exploring to unlock further financial support for charities. We plan to work with the government to identify further funding that can be made available.”
- Last week the Resilience and Recovery Loan fund secured £500,000 investment from Barrow Cadbury Trust. Chair Erica Cadbury said the investment would “go some way towards charities and social enterprises surviving the current storm through fast track, patient, and low cost lending”. Big Society Capital is in talks with further potential investors to the fund, including trusts and foundations.
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