2: Re-purposing public and private charitable assets

There are pots of money in existence that are aren’t currently being distributed to those in need – either due to legal restrictions or because they are dormant trusts held by inactive charities.

These charitable assets may be public or private, and in times of national crisis there is a strong case for repurposing them to bolster the coronavirus response. 
  

Key Ideas

Assets of The National Fund

The assets of The National Fund (c £500m) could be released, either by expediting the existing case under consideration by the Attorney General or by nationalising through primary legislation.

The National Fund was originally set up when an anonymous donor supplied £500,000 with a mandate to build an endowment large enough to pay off the UK’s national debt. With this debt standing at £1,821.3 billion in March 2019, the fund is equivalent to less than 0.03% of it. In 2009, the fund’s trustees concluded that there was no prospect of it being able to pay off the debt and applied to the Charity Commission to change its constitution so it could donate money to charities.

The Charity Commission sought the permission of the Attorney General in 2011. On 22 May 2018 an application was made to the High Court by the Attorney General for the release of the National Fund for the purposes of reducing the National Debt. An original court date set for November 2019 has been pushed back to October 2020. Complicating matters further, in early 2020 a claim was made on the funds by an unnamed party “X”, who purports to be a descendant of the original anonymous founder of the National Fund. Hence, freeing up the National Fund’s assets via standard means is more complicated than at first glance, as not only under the terms of the fund must its value be left to accumulate until such time as it is sufficient to pay off the National Debt in full, but now there is the additional issues of “X”’s claim to settle.

In 2018 the UK Government, through a ministerial answer to a written parliamentary question, stated that, according to expert evidence, "there is no realistic prospect of the Fund ever amounting to a sum sufficient to pay off the whole of the National Debt.” During a debate in the House of Lords, however, it was suggested that one possibility might be to use existing provisions in the founding articles of the National Fund to enable a donation of its assets to the Treasury on the understanding that match funding of equivalent value was then made available to support charities.

Whilst this idea was dismissed at the time, the political context has changed enormously given the imperatives of the current crisis. In light of the coronavirus pandemic, with the right political will, a way could be found to access the assets of the National Fund, and these would constitute a significant pot to be directed towards a national endeavour of similarly significant magnitude to that which the original founders had in mind.

Trussell Trust food bank volunteer Rotherham 500
Trussell Trust foodbank volunteer, Rotherham

    

Dormant charitable trusts

Dormant charitable trusts could be repurposed. There are many inactive charitable trusts in existence whose founders and trustees may have passed away, or may be struggling to spend income or identify beneficiaries; trusts may hold relatively small sums of money which might not have a meaningful impact on their own. 

UK Community Foundations (UKCF) has been working with the Charity Commission to transfer up to £20 million of dormant or inactive trusts to Community Foundations to invest in good causes.

The Revitalising Trusts initiative is part of the Government’s Civil Society Strategy. Charities may be contacted by the initiative if they have not spent any money, or less than 30% of their income, in the past 5 years.

In light of COVID-19, there is added impetus to build on these efforts by accelerating the process of identification and change of purpose for dormant trusts and inactive charities so that these pots of money can have a collective and meaningful impact during the crisis.

Government could convene actors in this area to conduct the necessary research to expedite the process.

Further ideas

State-controlled funds linked to fines

  • State-controlled funds linked to fines levied on companies could be redirected towards addressing the effects of the coronavirus crisis on civil society.  An example of this is the Gambling Commission’s levy on the industry, which the top 5 firms recently pledged to increase from 0.1% to 1% over five years in order to raise £100m for charities.

  
Relaxing Big Sociegy Capital criteria

  • The social finance investor Big Society Capital’s (BSC) criteria could be relaxed for a period of time to allow for a mixture of grants alongside the loans they provide, in order to meet short term financial needs of the sector. It is currently working on setting up an Emergency Liquidity Facility with 20 other Social Investment organisations to be able to quickly provide loans to organisations supporting social needs facing immediate cash-flow problems or in need of working capital.

    

3: Adapting philanthropic funding approaches and behaviour >

< 1: Government support for giving
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