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Firms to benefit from cheap loans

Fund will ease investors’ exposure to third sector

Nick KuenssbergA tax-efficient fund to provide social enterprises with affordable loans is expected to “change the landscape” for the third sector when it launches next month.

The SIS Community Capital fund, developed by Social Investment Scotland (SIS), will remove some of the risks associated with financing businesses in the sector.

As one of the first social investment tax relief funds available to UK investors, SIS Community Capital will allow individuals to invest in a fund which provides third sector organisations with access to loans at an affordable cost that would not be readily available from other finance providers.

SIS aim to attract an initial tranche of up to £500,000 which will be used to support between five and ten social enterprises in Scotland.

Investors will receive a 30% relief on their investment from their income tax liability.

NCM Fund Services, based in Edinburgh, will ensure compliance of all regulated activities of the fund.

A report from ClearlySo and Big Society Capital in 2013 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 among wealthy individuals who want their money to ‘do good’.

Nick Kuenssberg (above), chairman Social Investment Scotland, said: “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 of Social Investment Scotland, said the fund enables it to look beyond traditional sources of investment.

Gavin Francis, managing director, of Worthstone, an independent social impact investment resource for financial advisers, 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.”

Social Investment Scotland was established in 2001 to provide a new finance model for Scotland’s charities and social enterprises.

Since then it has invested more than £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.

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