Baroness Stedman-Scott will lead a review to identify and recommend options for how the government could motivate greater levels of investment in charitable bonds issued by Allia, the social profit society.

Allia’s model involves investing money from a bond holder to make a profit. As it is a charity, Allia does not pay tax, dividends to any shareholders or bonuses to its staff. And, with low operating costs, Allia can give a return to the investor in a charitable bond and give the rest of the profit away to the investor’s chosen cause.

The review, led by Baroness Debbie Stedman-Scott, chief executive of Tomorrow's People, will identify ways in which the government could encourage more capital from individual and corporate citizens to be placed in charitable bonds for the benefit of society rather than in bank deposits. The review will incorporate a cost-benefit analysis of fiscal incentives on bond investments, conducted by Grant Thornton, and is expected to report in the autumn.

Speaking at the launch of the review, Baroness Stedman-Scott said: “It’s not the government’s role to fix and fund everything itself, but government can support and encourage. I know from my work with Tomorrow’s People how effective Allia’s charitable bonds are; and now’s the time for government to work with us and encourage their take-up.”

Tim Jones, chief executive of Allia, said: "There is still a lot of potential for increasing donations," he said, "but there is also a limit to how much money in the economy could be donated. So it's essential for the government to support innovative fundraising models, like Allia's charitable bonds, that provide alternative ways of generating money for civil society."