Local charities make up the lifeblood of our communities and make a difference to millions of people on a daily basis. The Revitalising Trusts initiative, announced in the Government’s Civil Society strategy, will provide a huge boost to local charities by enabling us to distribute funds from inactive trusts to good causes.
There are many charitable trust funds in England and Wales that are inactive. The original founders and trustees may have passed away and many of the funds are now relatively small sums of money which makes it difficult to ensure they have a meaningful and local impact. Collectively however, these trusts hold a significant amount of money, which could make a huge difference to local communities.
In 2015, the Community Foundation began managing the Harry Payne Trust, a Charitable Trust in its own right, but with little or no succession planning for new trustees. Given our expertise in grant management, evaluation and community impact, we worked with their trustees and the charities commission to transfer the assets of the trust and begin managing their grant making, to safeguard its legacy for the future.
The Office for Civil Society and the Charity Commission are working with UK Community Foundations to transfer up to £20million of inactive trusts to Community Foundations to invest into local communities. It is expected that this will provide an extra £1million in grant funding to local community and voluntary groups every year.
Community Foundations are established, trusted charities that support local communities across the UK. Community Foundations reach every postcode in the UK and focus on the most pressing needs in an area. Community Foundations are leading grant makers and have a strong track record of supporting communities. They are reliable with a trusted model of delivery and are all quality accredited.
The Charity Commission and the Office for Civil Society have chosen to work with Community Foundations based on their expertise and experience in supporting communities and ensuring that funds are distributed well to tackle local need.
Minister for Civil Society, Tracey Crouch said, ‘this initiative will make a real difference to people and communities across the country. By working with UK Community Foundations and the Charity Commission, we will honour the original aims of these now-inactive charitable trusts by redistributing funds to help those that need it most.”
Tina Costello, Chief Executive of Heart of England Community Foundation said:
“This announcement is another step in the right direction for charities across the country. We look forward to working alongside UK Community Foundations to deliver the benefits of this scheme here in the West Midlands.”
Fabian French, CEO of UK Community Foundations said,
“We are delighted to be working with the Office for Civil Society and the Charity Commission to unlock these inactive trusts to benefit local communities for years to come. We have developed a simple solution that helps inactive trusts transfer their assets which meets all the required Charity Commission approvals”.
- What is an ineffective, inactive or dormant charitable trust?
An ineffective or inactive charitable trust is where the trust has spent less than 30% of its income over the past 5 years. A dormant charitable trust has not spent any income at all for the past 5 years.
There is estimated to be hundreds of millions of pounds income, every year, that could be used to support local voluntary and community groups, but which remains inactive in bank accounts across England.
- Why are these Charitable Trusts not spending their income?
The Charity Commission recognise that there are many reasons why charitable trusts become dormant and inactive – reasons include:
Out of date Objects – where the money was set-up for a specific purpose and that purpose no longer exists or is no longer relevant – For example: To buy wooden clogs for the 8:40 shift at the Barnsley Mill – today there is no mill or any 8:40 shift and people generally no longer wear wooden clogs.
Trustees cannot spend the income of the Charity – the example above highlights that sometimes the trustees cannot find beneficiaries to support. Other examples would be where the trust supports a local school or church that no longer exists.
Where the income of the Charitable Trust has eroded over the years – and is now no longer big enough to be relevant or about to support charitable work.
There are thousands of Charitable Trusts that have incomes of less than £10. Individually they are ineffective but by combining these small trusts there is a real opportunity to build Charity Funds that once again can support all sorts of local projects.
Trustees struggle to attract new trustees – many trustees are reaching their late seventies and eighties and feel that that have done their bit, but they can’t find new trustees to take over the responsibility of running the trust. Often this is because many are put off by the accounting and legal regulations now governing charities.
Trustees find that the work of administering the charity and its investment is becoming onerous or disproportionate to the level of funding – many Charitable Trusts have not always invested their assets well and for some the small amount of income that is generated is not large enough to make one grant over a five year period let alone an annual grant. Add to that new legislation such as GDPR and many trustees struggle to cope.
- Why Community Foundations?
Community Foundations are established, trusted charities that support local communities across the UK. Community Foundations reach every postcode in the UK and focus on the most pressing needs in an area. Community Foundations are leading grant makers and have a strong track record of supporting communities. They are reliable with a trusted model of delivery and are all quality accredited.
The Charity Commission and the Office for Civil Society have chosen to work with Community Foundations based on their expertise and experience in supporting communities and ensuring that funds are distributed well to tackle local need.
Community Foundations manage funds on behalf of thousands of individuals and businesses providing them with philanthropy guidance and grant-making services. To date they have distributed over £1billion in grants to more than 100,000 charities and small community groups across the UK.
Community Foundations are an effective and sustainable option for revitalising trusts and keeping them working to support local projects. They have staff with the professional skills and local knowledge to take on the management of these trusts, so they can continue to provide funding for the long term benefit of local communities, as the trusts originally intended.
UK Community Foundations is the umbrella organisation that supports the 46 Community Foundations across the UK.
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