Social investment tax relief fund raises £2.1m

22 Jun 2017 News

An impact investment fund offering tax breaks for lending money to charities has raised £2.1m - the first large-scale application of the relief.

The Resonance Bristol SITR Fund makes use of social investment tax relief, a relief designed to increase lending to charities, which was introduced by the government in 2014.

The relief allows an investor to claim back 30 per cent of the value of an unsecured loan to charity against their tax bill. The relief is only open to individual investors.

Investment company Resonance Limited has now published its first annual social impact report for the fund, which has invested £900,000 of the £2.1m raised so far in five social enterprises:  South Bristol Sport Centre, PAPER Arts, Bristol 24/7, Bearpit Bristol and Chandos House.

So far the fund has 70 investors, the majority of which from Bristol or the surrounding area, and 10 wealth managers and IFAs whose clients have invested in the fund.

Its report says all five social enterprises invested in so far have already increased their social impact or have made steps towards doing so.

As an example, six new all-weather football pitches at South Bristol Sports Centre have enabled increases in participation.

Simon Chisholm, Resonance investment director, said: “We’re delighted with the evidence of how investment has already helped these amazing social enterprises to start scaling up their impact.

“We’re excited about what the fund will be able to do with further investment it is seeking to raise over the coming year, and we’re already in advanced discussions with the next group of investees and many more social enterprises at an earlier stage.”

The fund remains open to eligible investors on a quarterly basis, and aims to raise £5m by the end of the year.

The Bristol SITR fund is being sponsored by UBS Wealth Management, which has also been offering the fund to its clients.

Regulation changes

In January, the government expanded a limit on the amount of investment a qualifying social enterprise can raise from €344,000 (£290,000) over three years to £1.5m over its lifetime.

It also halved the maximum number of full-time equivalent employees that a qualifying social enterprise can have from 500 to 250.

Resonance investment director Grace Howells told Civil Society News her organisation had been lobbying for an enlargement of the scheme for some time.

She said: "Now that we can make investments up to £1.5m we can now back a wider range of social enterprises and improve the pace at which we deploy investors’ funds.

"We are therefore pushing ahead with raising more investment into the Fund, to facilitate some larger deals later in the year."

 

 

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