Dormant Accounts: first phase closes

The Northern Ireland fund was intended to deliver long-term transformational change for third sector organisations, and there will now follow a period of consultation and assessment so that the impact of monies invested so far can be assessed.

Kate Beggs is Northern Ireland director of the National Lottery Community Fund, which is responsible for distributing the fund. She said: “Demand has been very high for this funding and it is really important to pause and make sure that the money is making a difference.”

Accounts are categorised as dormant by banks and building societies when they fall into disuse. Essentially these are accounts that people have forgotten about. They might have been set up for children by parents or relatives and were forgotten about or they could belong to people who have changed address and forgotten to tell their bank to give just two common examples.

The Dormant Bank and Building Society Accounts Act 2008 provides a means by which that money (hundreds of millions across the UK) can be put to good use rather than sitting on the balance sheets of financial institutions.

The way that it works is that banks and building societies can transfer accounts which have been inactive for 15 years or more to Reclaim Fund Ltd (RFL). RFL ensures that sufficient funds are held to meet any repayment claims that may arise in full and in perpetuity. The balance goes to good causes.

However there was an 11 year delay before the scheme came into operation in Northern Ireland, presumably because of political differences over how the monies should be spent. The deadlock was broken in 2019 by Sue Gray when she was permanent secretary of the Department of Finance. At the time there were no ministers in place.

The National Lottery Community Fund was asked to distribute the monies and before doing so it held consultations with the sector.

Kate Beggs explained “We’d received policy directions around building sustainability and resilience and capacity in the sector and what came through that consultation was strong feedback about burnout and exhaustion and even, for example, when leaders in the sector did have great ideas, the inability to carry out strategic planning to get their heads above the parapet.

“That was back in 2019 and since then we have had the pandemic, the cost of living crisis, constrained public expenditure and the loss of European funding. So nothing has changed, the themes today are very similar but all of those issues have exacerbated even further.”

“Demand for funding is going to continue to grow and grow and grow. There are some challenges for us in that - distributing funding equitably and targeting it appropriately. We can all get drawn into crises but also we also need to keep an eye on the long term to allow organisations to think about the future and take measures to make them less reliant on funding.”

By the time a scheme was devised for Northern Ireland there was more than £20 million available to spend here. The decision was taken to release this quickly to maximise benefits to the sector. In addition between £1.5 million and £2 million gets paid in every year as dormant accounts reach the 15 year figure for qualification.

This money has now either been allocated or will be once the final applications are processed. The programme will now be refined and focused.

Demand has been very high. In two years the fund has received 736 bids, which asked for a total of £60 million. an astonishing 189 bids were received in the two weeks before the fund was closed for applications. Applicants were able to bid for up to £100,000 over three years. Money for extensions will not be available from the fund.

With the initial tranche spoken for, it seems an ideal time to assess the effectiveness of the support provided. There will be an external evaluation and the Lottery Fund is holding a series of consultations to promote honest debate not just about what worked well, but also about what did not work so well.

Kate Beggs added: “We want to take a pause so we can make sure what we are doing is making  a difference, to learn from the feedback and to refine and focus where necessary.”

Relevant learnings will also be shared with government policy departments, especially the Department for Communities.

One gap already identified is funding for smaller grass roots organisations, who are typically very close to the communities they serve but often lack the resources to bid for funds. This will be addressed by providing funding they can access through relevant umbrella groups.

To date examples of funding provided include: for digital transformation; income diversification, including fund raising; improving governance; succession planning; partnerships and volunteering.

Some funding has also been made available for larger strategic projects. An example would be the Blueprint for the Future of Arts led by Arts & Business. Other potential projects are being explored.

The dormant account scheme is being expanded to include other assets, including the unclaimed proceeds from life insurance and pensions products, and dormant holdings in investment funds, shares and bonds.

This will bring more into the fund and this time there is not expected to be a delay to the introduction of the scheme in Northern Ireland which will have the same policy direction as before. It is expected that this will come into operation in 2024/25.