Third sector tax relief fund to offer social and financial return

Published: 25 May 2015 09:30

BRITONS are set to benefit from a social – as well as financial – return on their investments thanks to a new tax relief fund being rolled out this month.

They’ll be able to invest in good causes following the launch of SIS Community Capital – one of the first social investment tax relief funds to become available to UK investors.

The scheme, which has been developed by Social Investment Scotland (SIS), Scotland’s leading lender to the third sector and one of the UK’s top community development finance institutions (CDFI), will enable individuals to invest in a fund which provides third sector organisations with access to low cost loans not readily available from other finance providers.

SIS says it hopes to attract an initial tranche of up to £500k from UK investors to be used to support between five and 10 social enterprises in Scotland.

According to the lender, supporters will receive a 30 per cent tax relief on their investment.

The move follows a report from ClearlySo and Big Society Capital in 2013 which suggested that the retail investor market could generate £165 million of new social investment capital over the next three years and £480 million over the next five years. The report was based on research by Ipsos Mori highlighting unmet appetite for social investment amongst High Net Worth Individuals, who wanted their money to ‘do good’.

Nick Kuenssberg, chairman of SIS, said: “SIS has built up a great track record and enviable reputation throughout the UK’s social investment market, built upon its experience and expertise of delivering investment funds effectively. Research shows that there is an unmet demand for social investment products, and SIS Community Capital is our response to that demand.”

Thomas Gillan, chief financial officer at SIS, said: “As one of the first funds of its kind available to UK investors, SIS Community Capital has enabled us to look beyond our traditional sources of investment to connect more capital with more communities across Scotland. Social enterprises, charities and community organisations will be able to take advantage of affordable loans to help them grow and continue delivering positive social impacts at a local level.”

Gavin Francis, managing director of Worthstone, the UK’s leading independent social impact investment resource for financial advisors, added: “I believe this product has the potential to change the landscape for the social investment market and will help lead the way in the UK and Europe.

“On my travels talking to hundreds of financial advisers across Scotland, England, Wales and Northern Ireland the common theme has been that at this early stage we need a social investment product which helps to manage investors' risk by offering a government blessed tax reducer with diversification of investment in enterprises which generate positive social outcomes. This is what SIS is offering to deliver and that is why SIS Community Capital will be a ground breaking milestone for social investment.”

Edinburgh-based NCM Fund Services Limited is tasked with ensuring compliance of all FCA (Financial Conduct Authority)-regulated activities of the fund.

SIS was established in 2001 to provide a new finance model for Scotland’s charities and social enterprises. Since then it has invested over £43m in almost 200 organisations across Scotland, becoming Scotland’s largest Community Development Finance Institution. Projects that have benefited from the funding are worth in excess of £60 million and tackle a range of social issues including employment and training, health, arts and culture, care and the environment.

Jump to first paragraph.