How the budget could support charities

In partnership with ACEVO and UK Community Foundations (UKCF), we’ve written to the Chancellor ahead of his Autumn Budget with two proposals (PDF, 342KB) that will enable charities and volunteers to help vulnerable people find work, and strengthen local grantmaking.

Create a successor fund to ESF following Brexit

We’ve proposed that following our exit from the European Union, the government uses the money previously spent on European Structural Funds to create a successor to the European Social Fund (ESF).

ESF funding provides important investment for the UK in education, training and employment support, targeting vulnerable groups who often fall through the gaps of mainstream public services. This includes people with disabilities and health conditions, people facing multiple or complex barriers to employment, and ex-offenders.

With the UK poised to leave the European Union in 2019, we believe the government has a once–in-a-generation opportunity to develop a world-leading initiative that builds on the best aspects of ESF while addressing the design flaws which have led to wasteful bureaucracy.

This proposal builds on a set of design principles that we’ve recently developed in partnership with a cross-sector group of experts and organisations involved in employment and skills provision. We’ll be publishing more details about this work soon.

Use dormant assets to support local communities for a generation to come

Our second proposal is that the Chancellor use dormant assets to strengthen local philanthropy so that charities are sustainable for the long term.

The Government’s Commission on Dormant Assets recently concluded that there is approximately £1–2bn of potentially dormant financial and non-financial assets. We’ve suggested these assets be used to strengthen local philanthropic institutions, such as community foundations and local funders, to help fund small and local charities now and in the future.

Community Foundations are a growing UK success story. They encourage local philanthropy, using the funds they raise to make grants to local charities, based upon their expertise of what is needed and what works locally. They’ve already built an endowment of £500m. Match funding from dormant assets could be used to incentivise further donations from philanthropists.

Investing half of the maximum total from dormant accounts – £1bn – could generate a return of £40m per year for local grant-making in perpetuity, more if match funding was sought from philanthropists (assuming a 4% rate of return). Widening the network of endowed Community Foundations, and increasing the level of capital they hold, will generate investment returns from which small and local charities can be grant funded.

At a time when grants to charities are in decline, this is a valuable opportunity to address the sustainability of small charities so they can continue to support and help communities create opportunities for themselves well into the future.

A complementary proposal we’ve in our submission is to allow communities to use dormant assets money to purchase assets of community value, such as village halls or pubs, as set out in Locality’s Community Asset Investment Plan.

These proposals were included in our Election Manifesto earlier year. We’ve emphasised to the Chancellor that they do not require additional funding from the Exchequer, but merely the government’s support in taking them forward.