Social Finance and Kin Capital launched the first national fund to take advantage of the new Social Investment Tax Relief (SITR).
Charities and social enterprises do not rely solely on donations and grants. For many, their primary income comes from government contracts that allow them to deliver services to vulnerable populations. To grow their impact, many charities and social enterprises are looking for finance that allows them to develop and scale their activities. Increasingly, the government is recognising these organisations as critical to its success in meeting rising social needs.
The social sector is already an active lending market and recorded £3.5 billion of loans on its balance sheets in 2012/13. This market is being driven in particular by the rising demand for growth capital, as charities and social enterprises take on more delivery of high quality public services.
Why are we doing this?
Despite rising demand, the sector is currently undercapitalised due to a range barriers to obtaining investment.
- This demand needs to be met by providing investment capital, allowing both charities and investors to benefit from the expanding nature of the sector
- There is a need to invest alongside other Social Investment and Finance Intermediaries to increase the money available
What are we doing?
In November 2014, Social Finance and Kin Capital launched the Bright Futures Fund, the first national fund to take advantage of the new Social Investment Tax Relief (SITR). The Fund aims to reach £3 million and will invest in charities and social enterprises working to improve the lives of children, young people and vulnerable groups across the UK. It will look to provide £100k-£300k of 3-5 year unsecured debt to approximately 12 qualifying investments: ambitious and expanding charities and social enterprises that have a minimum of £500k million earned revenue and a two year trading history at the point of investment.
The Bright Futures Fund made its first investment into Ability Tec CIC, a Bolton-based social enterprise which provides contract electrical manufacturing products for firms in the UK. Ability Tec CIC's mission is commercial success whilst employing people with disabilities. The financing from the Bright Futures Fund will enable the company to grow, take on additional staff and secure its working capital needs.
To receive financial assistance, the enterprises must be: a charity, a community interest company or a community benefit society.
For investors in the Bright Futures Fund, capital put to work in qualifying social enterprises attracts 30% tax relief under the HM Government’s Social Investment Tax Relief (SITR) scheme.
This Fund is an exciting proposition as it offers investors the opportunity to use their money to drive social good while achieving a solid financial return.