FareShare South West, the Bristol-based charity that minimises food waste, is the first charity to complete a deal that makes use of social investment tax relief.

FareShare South West has received an unsecured loan of £70,000 from a social investment tax relief fund set up by impact investment company Resonance.

The money has been provided by a small group of angel investors who preferred to invest in a pooled social investment fund rather than directly investing in social enterprises on a deal-by-deal basis.  This way, they could spread the risk across a portfolio and cut the costs of structuring deals for individual projects.

The investment will help FareShare South West to scale up its operations diverting food industry waste to charities that help vulnerable people, providing catering services at events and providing training and employment for those excluded from the job market.

Matt Robinson, head of strategy and market development at Big Society Capital, said: “This is a milestone moment for the social investment tax relief,  It is particularly exciting to see it being used in the way it was intended; enabling a small charity to access unsecured lending, so that they can grow and increase their social impact."

Resonance now plans to build a series of city-based SITR funds around the country.

The Bristol pilot had an initial investment pot of £200,000. An £80,000 loan was also provided to Severn Project CIC, which plans to expand the production capacity of its urban farms which deliver fresh local produce to shops and restaurants and create jobs for disadvantaged locals.  However, because its core activity is agricultural, which is not currently eligible for SITR, the Severn Project CIC deal could not take advantage of the tax relief.

Investors in FareShare South West will receive interest at 5 per cent per annum for three years and 7 per cent per annum for up to three more years, but because they can also access SITR the expected return is likely to be closer to 14.5 per cent.