Dormant accounts to support active needs

Charities exist to help other people. Sometimes this comes at the cost of helping themselves.

In tough times, organisations face difficult choices. They tend to prioritise frontline services rather than their own stability. Altogether this is one of the third sector’s strengths – but it creates obvious problems. And, in the long run, stronger organisations will provide better support to service users.

Last month the Dormant Accounts Fund (DAF) opened for bids in Northern Ireland. The £20.5m pot is being distributed by the National Lottery Community Fund (NLCF) under direction from the Department of Finance (DoF).

Unlike most funding streams, it is not aimed at frontline services. Instead the DAF aims to grow capacity, resilience and sustainability.

Kate Beggs, NI Director of the NLCF, told Scope: “The department [of Finance] was thinking about gaps in funding provision. This fund is organisational, it is about core resilience, and about allowing the sector to think about the long term.”

Consultation on and design of the DAF took place largely before the pandemic. However, the need for organisational support and help with innovation has only grown since Covid-19.

“We asked organisations what they would do if they had time, and had some flexible money. They said they needed to improve strategic planning and leadership - but couldn’t focus on that because they were chasing funding pots all the time.

“We heard very clear messages about challenges facing the sector, in particular fragility. As we have come through the pandemic, we have seen them exacerbated.

“This fund will allow organisations to diversify their income, to reduce their dependence on public funds, strengthen their volunteer base, and more. All those things which need time and require investment.”

Change

What constitutes change? Or sustainability? This is another area where the fund is flexible. The idea is to be open minded about how the sector can improve and modernise.

Ms Beggs said: “One of the things we have tried to do is not define what the answer is for organisations in general. Lots of funders have tried resilience funding in the past but using their own definition of resilience.

“You can’t have a one-size-fits-all approach, so the challenge for us is responding to that. We need to be responsive and recognise individual organisations’ needs, while trying to communicate clearly what the funding is for.

“We have committed ourselves to a test-and-learn approach. This is new for us as well. As we receive applications and as we see really good examples of things we want to fund, we will want to provide more examples and more materials that people can look at for inspiration.

“However, this won’t be so organisations can replicate those changes to ask for funding. It is about providing organisations with ideas. Many organisations are very focused on their short-term needs but, as this beds in, we are encouraging people to take their time. There’s no deadline. No need to rush.

“It’s not about particular types of activity. We are not saying that we will fund xyz but won’t fund abc. We want people to tell us about the difference they want to make in their organisation. What would you do over the next two or three years to move your organisation forward.”

Details

The DAF is not simply about paying business costs for charities. The fund is trying to improve practice.

However, while the fund is flexible, any application will have to demonstrate how the organisation in question will change and improve – in the sense of being more robust or resilient – over the funding period.

That funding period is itself quite flexible. Grants of up to £100k are available, and will be issued over a period of up to three years, allowing change to take place over a decent period of time.

Moreover, applications to the DAF have no deadline. They are welcome any time – and the fund is designed to be sustainable.

Currently the value of the DAF stands at £20.5m. This money comes from dormant bank accounts – meaning those accounts that have been untouched for 15 or more years.

The fund will grow naturally as more bank accounts are deemed dormant. Expectations are that it will grow by between £1m and £1.5m every year. A Dormant Assets Scheme is currently being designed and this could well supplement this growth.

There are also broadly two strands to the DAF. The first is grants for individual organisations – or small groups – that want to improve their own resilience.

The second is more strategic. Bids can come in from larger groups, for example – again, the DAF is open minded – with the aim of sectoral improvement.

Ms Beggs said: “This is a recognition that it’s well and good to let organisations build their own capacity but we need to make changes that could shift the dial on a larger scale.

“We are talking about strategic partnerships that might leverage in other funding sources, that might include a number of partnerships, or could be across a whole sector – the age sector, volunteering, digital, and so on.”

Leaders and data

The NLCF is at pains to say it is open minded about how community and voluntary organisations should approach the DAF. Ideas - and conversations about ideas – are encouraged.

However, that does not mean all potential issues in the third sector are a total mystery. Two such areas are in developing leadership, and in use of digital tech and data.

Ms Beggs told Scope that the age profile of sectoral leadership – both on boards and in senior management roles - and volunteer bases is a concern. More young people need to be brought into the fold.

“Long-term leadership in particular is a worry for the sector. Not enough young people see community and voluntary organisations as a viable career path for themselves.”

At the same time, NI’s third sector is behind the curve on digital innovation. And digital innovation is a broad church. It means everything from fundraising, to engagement, to providing services (although the pandemic has seen many organisations take steps here), to using data to guide and improve practice.

“The sector has struggled to articulate what it needs and sometimes that’s down to a lack of available data. It’s not just about modernising services but also improving the way the sector is able to talk about its own impacts and needs.”

However, leadership and digital working are simply examples of what the DAF could be for. Perhaps the biggest strength of this fund is its open-ended nature – both in terms of time and of what it plans to support.

If you have any ideas about how to improve the third sector and to make it more robust the National Lottery Community Fund wants to hear from you.

Between its flexible grants, encouraging innovation, and a desire to share the good ideas that come from that innovation, the Dormant Accounts Fund could be a fertile ground for genuine improvements in Northern Ireland’s third sector.