A hand up, not a handout – harnessing enterprise to rebuild communities from the bottom up

By Seb Elsworth MBE, CEO, Access

The voluntary sector has shown itself to be resilient but the past few years, not least the challenges posed by the Covid pandemic, soaring inflation and a cost-of-living crisis, continue to test that resilience to the limit.

Too often civil society is seen as a safety net or a last resort, there in times of crisis but rarely thought of beyond that. As this timely report rightly states, there is an urgent need for joined-up thinking – bringing together the civil service and civil society leadership, alongside high-level political buy-in from right across government. As the report states, a country in which a greater proportion of society’s problems are stopped before they start, with civil society better able to focus on prevention than on crisis, is a far more resilient one.

Social investment has a key part to play in this: providing access to capital for charities and social enterprises and enabling them to expand their work, multiplying their social impact. Their beneficiaries include those most at risk from the cost-of-living crisis; those providing warm spaces or food packages to vulnerable people, those tackling youth unemployment or reoffending rates, to others providing crucial debt and advice services and mental health support.

In 2012, the government provided a portion of dormant assets funding to distribute to good causes via social investment. Since then, £425 million in dormant assets has been invested, reaching thousands of organisations which have used the capital to grow their impact, scale their operations and reach more people. It is highly leveraged, with each £1 of dormant assets having unlocked another £5 from other investors, so that total capital provided to charities and social enterprises over the decade is more than £2.8 billion. Most of this investment – 65% – has gone into the most deprived parts of the country.

It is these kinds of investments – initial funding leveraged to secure high-impact investment from the private sector – which will help deliver the kind of change the Law Family Commission’s report is calling for. The opportunity is immense, and the Government can start making a difference in this area right away. The consultation on how the next wave of dormant assets should be allocated has closed, with an announcement expected soon, unlocking around £740m worth of new funding for England.

The Community Enterprise Growth Plan

In seeking to harness the full potential of this funding, a group of leading social enterprise, voluntary sector and social investment organisations have mapped out the Community Enterprise Growth Plan – a plan warmly welcomed in the Law Family Commission’s report.

This plan would use new Dormant Assets to deliver three types of proven interventions:

  1. Extending the availability of small, flexible affordable loans to smaller community enterprises through blended finance – this is using a mixture of grants and loans which has proved highly effective particularly for enterprises in the most deprived communities. This would be targeted at places and communities that have not benefited from this type of investment in the past.
  2. Investing in non-profit community lenders in underserved areas to enable them to lend to the vital micro-businesses and community enterprises that struggle to access lending from mainstream banking.
  3. Providing tailored business support including advice to start-ups and incentives like match trading initiatives to encourage small enterprises to grow in more challenging areas.

The Plan would be delivered by a group of leading community enterprise, charity and social investment organisations that have come together to create it. Together we have over 10 years track record of successfully using dormant assets to invest in community enterprises.

Our combined experience will mean the government will be able to start making a difference from day 1 while it undertakes the vital additional work called for by the Law Family Commission Report: driving regulatory reform, using its convening power and leveraging its data to ensure that a meaningful majority of grant-makers make more long-term, flexible financing available more simply to the sector.

There is no silver bullet to fix the challenges facing the UK but approaches like those outlined in the Community Enterprise Growth Plan, and the Law Family Commission’s report, will help deliver a society more resilient to the challenges of the future, and better able to recover from any crises which await us. As the report notes, the need for civil society’s full potential to be unleashed has never been bigger.

This piece was written in response to the publication of the report ‘Unleashing the power of civil society’