£12m boost to diverse-led social enterprises in new UK dormant assets strategy

The UK government yesterday announced £12m in dormant assets funding will be made available for Pathway Fund, a social investment wholesaler focused on black and ethnic minoritised-led social enterprises, as part of a new allocation of £440m of dormant assets money.

The government will split the funding made available through the recently expanded dormant assets scheme between four causes – youth, financial inclusion, social investment and community wealth funds – with social investment receiving £87.5m, £12m of which will be allocated to Pathway Fund, according to the government’s new dormant assets strategy.

Culture secretary Lisa Nandy (pictured) said: “From supporting young people and enhancing financial inclusion to driving social investment, this transformational funding will reach some of the most disadvantaged areas across the country and have a real impact on people’s lives.”

Using dormant assets funding to support a social investor focused on Black-led social enterprises was central to the recommendations of the high-profile Adebowale Commission on Social Investment, published in 2022, which condemned the UK social investment sector for failing to reach the entrepreneurs that needed it most.

Pathway Fund provides grants and blended finance investments and runs programmes to support black and minoritised social entrepreneurs to access social investment. 

Pathway Fund CEO Asher Craig said: “This is a pivotal moment for black and ethnically minoritised communities. The earmarked £12m commitment to Pathway Fund is more than a financial investment — it is a powerful endorsement of the talent, innovation, and resilience that exists within the communities that have been historically excluded from mainstream finance.”

It is a powerful endorsement of the talent, innovation, and resilience that exists within the communities that have been historically excluded from mainstream finance

The dormant assets scheme reunites people with lost financial assets, and, if the money remains unclaimed, uses it to back social and environmental initiatives across the UK. Since its inception in 2011, the scheme has provided nearly £1bn to social and environmental causes across the UK. It has been instrumental in growing the social investment market from £830m in 2011 to more than £10bn in 2023, notably through Better Society Capital, which was established with £425m from dormant assets in 2012.

Originally restricted to funds held in bank and building society accounts, the scheme was expanded in 2022 to include insurance policies, pensions, investment management and securities – potentially unlocking £880m, UK-wide, in the coming years. (England receives just under 84% of this, which will be around £738m, and the rest of the money is under the control of devolved governments.) 

• Read more: Opinion: ‘Funders, treat Black-led organisations fairly or accept responsibility for our erasure’

More money allocated – but not for social investment

The previous Conservative government announced in 2023 that it would make £350m of the English portion of the expanded scheme available to four “good causes” with the money evenly split between youth, financial inclusion, social investment wholesalers and community wealth funds (pots of money for deprived communities to spend as they wish). 

This was seen as a disappointment for the social investment sector, which had hoped to receive up to £500m over ten years, but the current Labour government confirmed the plan last autumn.

The new strategy increases the overall dormant asset allocation by £90m to £440m by 2028, but the additional money will be channelled to youth and financial inclusion initiatives (which will each receive £132.5m), with social investment and community wealth funds still receiving the initial £87.5m.

However Stephen Muers (pictured), CEO of Better Society Capital, does not see this as an indication the government is losing interest in social investment. 

He said: “Dormant assets is only one of the areas in which we are working with government and recent developments such as the Social Investment Advisory Group [which advises the government on the creation of a new social impact investing vehicle] give us confidence that social investment has become more of a priority than less.”

He said that allocations to youth and financial inclusion “will hopefully create opportunities for social investors” and that the wholesaler would continue to advocate for support for social investment from dormant assets.

• Read more: Exclusive: UK government’s Social Impact Investment Advisory Group members revealed

‘Modest’ amount of money

The allocation to Pathway Fund is among the recommendations of the Community Enterprise Growth Plan, a set of proposals aimed at maximising the impact of dormant asset funding in left-behind communities put forward by a broad coalition of social investment and social enterprise organisations – including Better Society Capital, Social Enterprise UK, GSG Impact and Responsible Finance. 

In a victory for the coalition, the government’s new dormant asset strategy explicitly follows the recommendations of the Community Enterprise Growth Plan, including targeting the poorest areas of the country, working in partnership with local people and encouraging the use of blended finance for social enterprises otherwise struggling to access investment.

The strategy also puts a focus on social investment in youth – with £12.5m earmarked for organisations supporting young people. The UK government has recently made tackling child poverty a priority.

Seb Elsworth, CEO of Access, the Foundation for Social Investment, said: “With £87.5m from dormant assets, we’re targeting investment where it’s needed most – reaching further and deeper into communities affected by long-term economic challenges and in groups that have traditionally faced barriers to funding, including black and ethnically minoritised-led organisations.”

The government strategy however fails to meet one of the key recommendations of the plan, which is to allocate £500m of dormant assets over 10 years to “community enterprises” (social enterprises, trading charities and community businesses).

• Read more: Dormant assets could unlock £1bn to boost social enterprise and level up communities, coalition tells UK government

Peter Holbrook, CEO of Social Enterprise UK, said while the allocation was “modest given the challenges facing our nation”, additional resources from dormant assets to support more investment into social enterprises were still welcome.

He added: “In line with its missions and manifesto commitments to grow diverse businesses, co-operatives and mutuals, I look forward to a more comprehensive package of support coming from the government soon. This would enable social enterprises of all kinds to fulfil their potential to deliver the sort of nationwide economic recovery that people and communities can truly feel."

The programme will be delivered by Access, which was already a recipient of the first tranche of dormant assets. Access is to launch a brief consultation later this week on how to support the implementation of the Community Enterprise Growth Plan. 

Better Society Capital, which had advocated for Access and Pathway Fund to receive the money, will not receive any of the new dormant assets funding itself.

Header image: An event hosted by London-based innovation organisation Do it Now Now, which supports black communities around the world, which has partnered with Pathway Fund.