What should the governing principles of the Dormant Bank Accounts Fund be: (the view of Aberlour Childcare Trust)
The fund should be disbursed in a sustainable and transparent manner.
The fund should represent new money to the voluntary sector and should not be regarded as an opportunity for government or local authorities to divert funds, destined for the voluntary sector, to other priorities.
The fund should be targeted in a way that will generate maximum impact. Government and BIG should resist the urge to dissipate a fund, that only represents just over 1% of the annual income of the third sector, across the entirety of the great many causes represented within it.
Following an initial capital and revenue injection that answers pressing and immediate needs, the fund should ideally be invested so that the return to the voluntary sector beneficiaries is long term and sustainable.
Such an investment should be made within ethical parameters in keeping with the spirit of the voluntary sector.
Priorities for the disbursement of the fund should be reassessed on a periodic basis, subject to agreement by the Scottish Parliament.
The suitability of the disbursement mechanism (i.e. BIG) should be reassessed on a periodic basis.
Any reporting requirements or evaluation criteria for receipt of funding should be standardised in line with emerging sectoral norms (i.e. along the lines of the model for new philanthropy capital reporting.)
That the Banks, in collaboration with HM Treasury, the Scottish Government and the Voluntary Sector, periodically assess the uptake of the Reclaim Fund with a view to apportioning more expendable money to the Dormant Accounts Fund if the reclaim fund experiences a lesser than expected level of demand.
5. Which of the following funding models set out in the BIG Lottery Fund paper would be the most valuable for the Third Sector?
Grants, loans, trust funds, contracts, other
Arguably the fund (or the return on the invested balance of the fund) should offer a range of funding opportunities. As we will go onto articulate in detail later, we believe that there is a compelling case for diverting the lion’s share of the Dormant Accounts proceeds to the Children and Young peoples sector. Due to hostile conditions in the economic operating environment in which our sector finds itself, there is an argument to suggest that an initial release of funds in the form of revenue and capital grants would be needed to ensure the viability of those organisations who are currently struggling to sustain the services they provide and are suffering closures and cut backs. This represents an initial ‘first aid’ solution to the problems experienced by the sector brought about by the credit crunch, a drop off in corporate giving, competition presented by diversion of funds to national sporting events and the movement of Local Authority departments to charitable status (i.e. Glasgow Culture and Leisure).
Following this a range of funding options should be made available for the long term. Not all of the funding options suggested above would actually be open to all voluntary organisations. Many smaller and faith based organisations are prohibited by constitution from taking on loan funding. Similarly, other types of funding are not mentioned in the list, i.e. seed corn funding for social enterprise business start up would allow a voluntary organisation the latitude to begin a venture which might secure its future in perpetuity with only a little initial funding.
6. Should the Fund be used for a particular type or mix of funding? - e.g. capital revenue investment to generate income, investment to assist organisational growth, innovative uses, use beyond innovation funding, community development endowments.
We believe that a ‘first aid package’ of distribution would be necessary in the first instance. This would see an initial release of money (e.g. £15million) in the form of revenue and capital grants to ensure the immediate short term viability of a range of organisations, projects and services in the priority areas identified before then moving to a more structured and sustainable funding regime. We would support an investment programme for the remainder of the initial £40 million (e.g. £25million) that could generate wealth in perpetuity. The additional £4 million that would then follow every year thereafter, could be apportioned in a similar fashion with a proportion, (e.g. £2 million) being used as revenue and capital and the rest (e.g. £2 million) being used to grow the size of the initial investment portfolio.
7. What timescale should the estimated £40 million be released in?
40million over 2 years, 10 million a year for 4 years, smaller amounts into perpetuity
This is misleading as one interpretation of the question presupposes that the entire £40 million should be disbursed rather than invested. If by ‘released’ the question seeks to establish when the money should be made available by the banks to BIG and subsequently to the voluntary sector, then we would argue that this should happen as soon as it has been identified by the banks. The banks have profited from holding this money for long periods of time, it is only fitting that the voluntary sector benefit from the income generating potential of such a large some as quickly as possible.
If the question seeks to identify a potential model then we have suggested one with indicative proportions above.
8. Should the Fund be used for a particular purpose that would apply across the sector?
Until such time as Scottish Ministers have, with the assent of Parliament, identified priority areas for the fund it is impossible to answer this question beyond the hypothetical. Cross sector applications are too vague, for example one could argue that Capacity building could be achieved through direct revenue and capital grants
9. If yes, please rate the following in terms of importance?
Capacity building
Training
Governance
Public policy research
Expansion of services
Modernisation and improvement
10. Are there particular priority areas where the Fund could make the most impact? (e.g. particular causes/ beneficiaries/ geographical areas)
With perhaps the removal of a focus on financial inclusion we believe that the fund should largely replicate the investment in children and young peoples services already committed for the DBA fund south of the border. A failure to do so would see a two tier quality gap emerge between services for children and young people in England and those in Scotland.
Investment in services for children and young people will have a tremendous benefit for the whole of society, with a positive impact on employability, youth justice, community engagement and participation, health and well being and citizenship to name but a few. To seek to apportion the funds equally across the huge range of interests represented in the voluntary sector would nullify any positive impact this fund could have as the impact would represent a colossal waste of an opportunity to breathe life into an area of the voluntary sector that has experienced under funding, short-termism and uncertainty for many decades.
The Dormant Bank Account Fund amounts to an initial fund of £40million, followed by an annual fund of approximately £4 million, this represents just over 1% and 0.1% of the voluntary sector’s annual turnover respectively.
[NB: Am hoping to evidence the case that the children and young peoples sector represents some XX% of the total voluntary sector yet has attracted only X% of statutory funding (hoping this is disproportionately small) I have a SPICe request in for these figures at the moment and am about to take receipt of some SCVO research.]
11. Please use the space below to make any other points....