On March 7th the Government announced an important update regarding the future of the Dormant Assets Scheme. The news signals a positive result for the future of social investment, enabling the sector to grow and continue to create more impact. In this blog we explore what that impact looks like and how new Dormant Assets funding will enable organisations to tackle social problems within their own communities.
What is The Dormant Assets Scheme?
The Dormant Assets Scheme is a scheme which aims to reunite people with their financial assets. Where this not possible, the money is used to support social and environmental initiatives across the UK.
Dormant Assets currently within the scheme come from across the banking sector, however last year a second piece of legislation was passed to enable non-cash assets like pensions and insurance policies to allocated towards the scheme. This will enable a further £880 million to be used towards creating further social and environmental impact.
Since the Dormant Assets Scheme was established in 2008 and launched in 2011, it has unlocked £892 million for good causes across the UK. In England, this includes £485 million for social investment through Big Society Capital, £60 million of which was channelled to Access – The Foundation for Social Investment (Access) to provide blended grant and loans to charities and social enterprises.
How will the new assets be used?
The additional £880 million will be used to continue to fund social investment, youth, and financial inclusion, and with the addition of a fourth, new cause called community wealth funds. These are pots of money that will allow local residents to improve their communities.
The decision on how assets will be allocated follows an extensive public consultation last summer. A broad coalition from across the social, business and investment sectors came together to feed into the consultation and propose the Community Enterprise Growth Plan. The goal of this plan is to enable social investment to reach places and communities that have not benefited from investment to date. We are grateful to the many organisations who shaped and supported proposals developed.
The plan – if fully supported by dormant assets – will create jobs, boost growth and address regional inequalities by unlocking new investment for community enterprises. These include the community-based businesses, social entrepreneurs and trading charities taking entrepreneurial approached to tackling social problems. Read more about the Community Eterprise Growth Plan.
What has this impact looked like to date?
The UK’s £7.9 billion world-leading social investment market has, in large part, been catalysed by dormant assets funding to date, which is a real success story for the Scheme.
Through Big Society Capital’s investments alone, over 2,000 social enterprises and charities have been able to access the finance necessary to grow their organisation, allowing them to increase or sustain their impact. Where there is data available, 65% of organisations in Big Society Capital’s portfolio are in the most deprived parts of the country. Blended finance programmes administered through Access have opened social investment even further, supporting small, community-level organisations working predominantly in the 30% more deprived places in the country.
Additionally, Big Society Capital has secured more than £3 of match funding for every £1 invested since its establishment and this will continue to grow as the funds are paid back over time and re-invested. Total investments by Big Society Capital have reached £865 million over the decade from £625 million of capital, which will only grow over time.
Two examples of organisations who have used social investment – and blended finance in particular - to enhance their impact and become more financially independent are Food Works in Sheffield and New Leaf Initiative CIC in Birmingham.
Intercepting food waste to provide affordable meals in Sheffield
Food Works Sheffield intercepts food waste from businesses and producers and distributes it to local people through its market, cafes, and ready meal services. The organisation intercepts 500 tonnes of food waste every year and served more than 5,000 people every month across its cafes and market – a number which continues to grow.
Since starting since 2015 they have used social investment to purchase premises, including their Handsworth Warehouse and to expand services via their ready meals and café. They have built a sustainable business model by charging a minimum contribution for food boxes, which would otherwise be destined for landfill, as well meals in their café using surplus stock. Read more about how Food Works Sheffield has used social investment.
Helping people with convictions and care leavers to find meaningful employment in Birmingham
New Leaf started in 2014 in Birmingham, to help people facing complex barriers to work, including those trapped within the criminal justice system, to find employment. Since then, they have helped nearly 1300 people with their rehabilitation services, which includes help with stabilising within the community and upskilling/ training support to help clients find work. The organisation has used social investment via loans since 2019 and have most recently taken on investment to refurbish their training academy and launch their ethical recruitment agency which aims to fill the current employment gap in the UK. Read more about the services New Leaf offers.
Whilst we wait for an update on how much of the £880 million will go towards implementing the Community Enterprise Growth Plan and other social causes, it has already been confirmed that £31 million of immediate funding from dormant assets will help social enterprises and charities with the rising cost of energy and increased demands as a result of the wider cost of living crisis.
This will enable social investors to support charities and social enterprises to install energy-saving technology in their buildings and help them meet the growing need for their services because of cost-of-living pressures.
Keep an eye out across Big Society Capital channels over the coming weeks for all the latest news on Dormant Assets.