The civil society strategy: What it says about funding and finance

This blog post is one of a series on the civil society strategy. For an overview of the strategy, please see our post on What you need to know

 

For a long time government has said that it wants to make it easier for charities, particularly smaller ones, to access funding. So there were high expectations for the civil society strategy, seen by many as the big opportunity for government to set out how it will make this happen.

This blog provides a summary of the key announcements aimed at improving the funding of charities.

What is the vision?

Despite the many pots of money mentioned by the strategy, there has been disappointment about the lack of commitment to a long term and strategic approach to funding charities and the communities they support.

In particular, the strategy doesn’t set out any proposals regarding the biggest potential source of funding: the larger £2bn pool of unclaimed assets identified by the Dormant Assets Commission in March last year.

NCVO’s proposals ask for the money to be used to endow community foundations and to allow charities to purchase community assets to help them become more self-sustaining. And there is a growing consensus about the need to distribute funding more strategically and effectively, to build the long-term sustainability and capacity of civil society, which in turn would mean that organisations are better placed to help communities in need.

Yet the strategy merely acknowledges the ‘imaginative use of dormant assets’ that many respondents to the consultation proposed, then goes no further. So there is a sense of missed opportunity, and this appears to be one of the key areas where there is still no real vision about what government’s approach to funding civil society should be.

What are the key announcements?

It could be that the 10-year timeframe initially envisaged for the strategy simply proved too challenging when it came to funding – and the real decisions about how to use dormant assets probably aren’t going to be made until after 2020.

The strategy does however sets out a number of important and welcome commitments, which brought together could still mark a considerable change in the funding of civil society, by unlocking more resources and improving the efficiency of existing ones.

An increased focus on community assets

The strategy sees the support of community ownership and management of buildings and spaces in a locality as an important opportunity to enhance the capacity for community action and community building.

  • To help communities take more ownership of local assets, government promises to revise existing guidance: it will signpost support and advice available to communities to improve and shape where they live through the new Community Guide to Action and the MyCommunity website.
  • Government is also exploring ways for community-led enterprises to access non-repayable finance, to ensure that initiatives acquire a genuine asset and not just a liability. By focusing on equity and grants, there will not be the debt that comes with repayable finance.
  • And the Department for Culture Media and Sport together with the Ministry of Housing, Community and Local Government is going to design a programme to identify the barriers to sustainable community hubs and spaces. The programme will then look at opportunities to overcome these obstacles in places where they are most needed. A consultation with key partners is expected shortly, with a view to launch some pilot projects later this year.

Developing new models of community funding

The strategy rightly recognises the importance long-term, sustained relationships between communities and investors, and commits to creating new models of finance to meet the specific needs of communities.

What these models will look like is yet to be decided, and £35m of dormant accounts funding is being allocated by Big Society Capital and Access (The Foundation for Social Investment) to support this work.

There will also be a new financial inclusion organisation, responsible for deploying £55m funding from dormant accounts to address the problem of access to affordable credit. Details remain to be set out, but this new organisation will be independent from government and will act primarily as distributor of funds to third parties, including charities, which are tackling financial exclusion.

The strategy places particular emphasis on place-based investment programmes, in an attempt to bolster communities that have not benefited from the growth of major cities. Big Society Capital will play a key role in developing new models of community funding, bringing together ‘social impact investment with philanthropic funding, crowdfunding, community shares and corporate investment’.

In addition, the Ministry of Housing, Communities and Local Government Communities Partnership Board will explore ways to raise awareness of community shares as a mechanism to encourage ownership of community assets.

Releasing money from inactive charitable trusts

The strategy commits government to unlocking £20m from dormant charitable trusts, which spend less than 30 per cent of their annual income, to support community organisations.

The work will be carried out over the next two years, in collaboration with the Charity Commission and UK Community Foundations.

UKCF have been working on this for some time now, but the explicit support of government is no doubt a welcome one.

Exploring ways to encourage more collective giving

The strategy commits government to explore how to encourage more collective giving, and a collaborative, peer-influenced form of philanthropy that could help develop larger funds.

There will also be an investment of over £750,000 before 2020 in the growth of place-based giving schemes to support civic philanthropy.

But the strategy doesn’t set out how it will promote philanthropy and giving across all government departments, and this has understandably been met with some disappointment.

Reviewing Social Investment Tax Relief

The strategy confirms government’s commitment to review the operation of Social Investment Tax Relief (SITR) in 2019. This could potentially expand the size and type of projects eligible to claim SITR.

The strategy’s aim is to make SITR a mechanism to increase the financial strength of charities and social enterprises, as well as a catalyst for community ownership and community energy projects. Over the past couple of years, there have been some doubts about the relentless focus on social investment, so a review of SITR will be helpful to assess the overall usefulness and impact of this form of finance, particularly for charities and smaller organisations.

What next?

We are still waiting for government to consult on the design of the UK Shared Prosperity Fund, and this will be an important opportunity for civil society organisations to highlight their role in supporting inclusive growth and driving productivity.

And despite the strategy’s silence on the use of dormant assets, we will continue to call for them to be used to strengthen local philanthropy so that charities are sustainable for the long term.

 

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James Clarke James joined NCVO in 2018 as a Trainee Policy Officer. His primary area of work is funding and finance, including providing secretariat support for the Charity Tax Commission. He also works on safeguarding EU funding post-Brexit.

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