Dormant Trusts

The Charity Commission and 46 UK Community Foundations have been working for over a decade to support the Trustees of dormant (those that have spent nothing for 5 years) and ineffective (those that have spent less than 30% of their income) charitable trusts who are struggling because they find it hard to recruit new trustees; experience difficulty generating sufficient income to support meaningful grant-making; find it difficult to spend their annual income due to restrictive and outdated objectives; or in some cases fail to identify the groups and individuals who qualify for their grant awards.

During this period more than 3,400 charitable trusts from across England and Wales have been closed and dissolved and their assets totalling over £60 million have been transferred to a fund with a local Community Foundation. These assets are then properly invested with best-in-class investment managers with their annual income now being used to provide more money in grants to individuals, small charities and community groups, in line with the spirit of the original gifts, their objects and local geographic areas of benefit.

It is estimated that by 2020 an additional £20 million of dormant or ineffective trusts will have been transferred and made available for community grant-making across England and Wales. The initiative has to-date focused on dormant and ineffective charitable trusts with income over £1,000 however, research has identified nearly 2,000 small charitable trusts with income totalling approximately £350,000 but expenditure of only £7,500 per annum. The value of these trusts is estimated to be £25 million, and over 6 years, the total income unspent is over £2 million.

Whilst local charities are struggling to raise money, these much needed funds brought back to life will create significant impact across local communities.

Looking at trusts with an income of more than £100,000 a year and total income of £7.5 million pa, less than £1 million is being spent – so over 6 years, £40m is remaining unspent.

It has not proved cost effective, under the current initiative, to transfer the assets of the very smallest charitable trust – and the Charity Commission is looking at devising a simpler solution which will have the following benefits:

  1. Help trustees who are genuinely struggling to fulfil their obligations to deliver public and charitable benefit through the trusts they are responsible for. The original donors deserve a solution which will ensure the assets continue to support local people and communities
  2. Unlock £millions of assets to allow much needed funds to support small charities and groups in local communities
  3. Ensure the assets of these dormant and ineffective charitable trusts are professionally invested to maximise returns and net income for annual grant distribution
  4. Reduce the number of small inactive charitable trusts registered at the Charity Commission and the work currently undertaken by the Charity Commission to support them

Benefits:

  • Support local community groups and charities to strengthen local communities and local support services
  • Support for good governance through CVS network to strengthen local voluntary organisations
  • Funds for Community Foundations to support and increase their local grant making initiatives