In order to establish a Social Impact Fund, the Social Entrepreneurship Network Germany (SEND) a reform proposed. To this end, so-called dormant assets are to be used to finance companies with social added value. Now there is news.
Since innovative solutions to societal challenges such as climate change, an aging society, or structural change brought about by digital transformation often struggle to obtain appropriate financing, a reform proposal has been initiated. Dormant assets could be channeled into a social impact fund.
Use up to 9 billion euros of assets for society
Dormant assets are assets with which financial institutions have lost contact with customers. This usually happens when someone moves or changes their name before their death without reporting it. In Germany, the value of these assets is estimated at between €2 billion and €9 billion. Germany is the only country in the G7 that does not have legal regulations governing what happens to these assets.
The next steps
What has happened since October? The reform proposal has now been included in the High-Tech Forum's discussion paper on social innovations as a possible source of funding for social innovations. Furthermore, a press release from the governing parties on the upcoming coalition proposal for greater support for social entrepreneurship has taken up the proposal.
"We are pleased that our proposal to establish a Social Impact Fund through dormant assets is receiving so much cross-party support. Now it's up to politicians to move from talk to action and finally put this 'dead capital' to work for society,"
explained Markus Sauerhammer, Board of SEND, in response to a request from Munich Startup.
How do other countries deal with this social investment capital?
Other countries use these funds for the common good. For example, Japan uses them to finance solutions to the challenges of an aging society. In Great Britain, banks transfer these assets to a 'reclaim fund'. If the money is not claimed by the heirs, a semi-public fund of funds for social investment capital benefits. The advantage: Such models create added value for society—and do not burden taxpayers.
Curious? SEND has also provided an update on the concept in a video:
A win for society
For the report on the reform proposal Representatives of Ashoka, the federal initiative Impact Investing, Social Entrepreneurship Network Germany (SEND) and the 'Association of German Heir Investigators' have joined forces.
The group believes that society as a whole benefits from this concept. Firstly, the Social Impact Fund could finance innovative solutions to societal challenges. Secondly, potential heirs could use a registry, as is the case in the UK, to find the dormant assets of deceased individuals.
