Big Society Capital has announced a new crowd match fund worth £10m, in conjunction with three crowfunding platforms.
The crowd match fund will enable individuals to invest directly in charities and social enterprises through one of three crowdfunding platforms - Crowdfunder, Ethex and ThinCats (through Community Chest) – which will list social sector organisations who want to raise debt and equity finance.
Those investments will be match funded by BSC. The investments may also be eligible to attract the social investment tax relief (SITR).
Ben Warren, investment associate at Big Society Capital, said the fund marked a “totally new approach for social investment and crowdfunding”.
“By bringing together the experience and knowledge of these three partners, we want to open up opportunities for the public to invest in a huge variety of causes they feel passionate about.
“We hope that this initiative will help charities and social enterprises find new routes to investment which could offer better value and engagement from their local community. Donation-based crowdfunding was the fastest growing model of alternative finance in 2015, and we are excited about the potential for this fund to create similar momentum in the social investment sector,” he said.
The move was described as a “game changer” by Phil Geraghty, managing director of Crowdfunder.
“We know from Crowdfunder’s experience that matching can supercharge campaigns and that for every pound of matched funds for reward-based crowdfunding, it levers in £4 from the public,” he said. “For community groups with big plans and projects, in our experience community shares are the main way they’ll fund those, and being able to incentivise their supporters to invest will be a fantastic addition.”
Recent research by the ‘innovation foundation’ Nesta revealed a growth in the UK’s alternative finance sector of 84 per cent last year, with £3.2bn in investments, loans and donations.
Chancellor Philip Hammond recently announced an increase in the amount that younger charities and social enterprises can raise through SITR to £1.5m from April 2017.
