Over 30,000 social enterprises and charities could benefit from Social Investment Tax Relief (SITR), suggesting vast untapped potential, according to research undertaken by Big Society Capital, and backed by the Department for Culture, Media and Sport.
Big Society Capital has responded to the Government’s call for evidence on SITR. Based on extensive research and feedback from social enterprises, charities and other key stakeholders, the organisation is calling on the Government to make essential changes to the tax relief, including:
- Expand eligible activities to include the hire of assets on a short-term basis (for example, one month or less).
- Expanding eligible activities to include community-owned renewables and refinancing
- Increasing the lifetime limit to £5 million
- Eliminate the restriction on organisations over 7 years old applying
Cliff Prior, CEO of Big Society Capital, commented:
"Social enterprises and charities are a key part of the social fabric of the UK, helping people in disadvantage in every town and city in the country. We believe that SITR has the potential to bring about great change in our society by helping organisations get the investment they need to tackle some of our most pressing issues. It fills a critical gap in financing for them and has already raised over £11.6 million to grow their impact. Importantly, SITR also enables more people to invest in line with their values, often within their own community.
In order for the full potential of the tax relief to be achieved, it’s crucial that the Government makes the necessary changes to expand both the reach of SITR and its ease of use. We believe the current model is based too closely on other, more commercial tax reliefs, such as the Enterprise Investment Scheme. The key difference is the need not only to support start-ups, but to level the playing field, as social enterprises and charities find it harder to access finance than their commercial counterparts.
SITR presents another chance for the UK to be a world leader in the social impact investment space, a world leader in investing for good and improving lives and communities. We look forward to working with the Government and the industry to develop a version of SITR that can help more social enterprises and charities achieve greater levels of positive social impact."
Big Society Capital’s full response to the consultation can be found here.
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NOTES TO EDITORS
ABOUT BIG SOCIETY CAPITAL
Big Society Capital improves the lives of people in the UK by connecting social investment to social enterprises and charities.
We know that investment can help social enterprises and charities achieve more. We believe the greatest chance to improve lives comes when investors and enterprises are both motivated by social mission.
We engage with investors, fund managers, social enterprises and charities to make it easier to use social investment. With our co-investors, we have made over £1.7bn of new capital available to organisations with a social mission, through investments into fund managers and social banks. We have a special focus on: providing homes for people in need; supporting communities to improve lives; and early action to prevent problems.
BIG SOCIETY CAPITAL’S INVOLVEMENT IN SITR TO DATE
Since our inception in 2012, together with other investors, Big Society Capital has made over £1.7 billion of new capital available to over 1,100 organisations with a social mission, through investments into fund managers and social banks. This includes a recent £2.25 million investment into Resonance to support both their existing regional SITR funds and launch two more. We also matched individual SITR-eligible investments made via three crowdfunding platforms: Community Chest (loans), Ethex (bonds and community share offer) and Crowdfunder (community share offers), and our net commitment is £5.5 million to date.
Big Society Capital seeks to raise awareness of and build confidence in SITR through the GET SITR campaign. GET SITR is a joint initiative led by Big Society Capital in partnership with the CIC Association, Community Interest Companies, The Community Shares Company, Power to Change and Community Shares. With the support of the Department for Digital, Culture, Media & Sport, GET SITR offers free 1:1 support, online guides, webinars and podcasts for social enterprises and charities, investors and advisors all seeking to raise SITR investment.
As part of GET SITR, Big Society Capital conducted a market-sizing exercise with research from gov.uk and NCVO Almanac data. We estimate the number of organisations that could use SITR in 2018 at around 30,000.
PRESS CONTACT
Kathryn Mortimer, Press Officer, Big Society Capital
T: 020 7186 2537, E: kmortimer@bigsocietycapital.com