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First Social Investment Tax Relief Fund Reaches its First Close



The UK’s first large scale Social Investment Tax Relief (SITR) Fund, from social impact investment company Resonance, has achieved a first close of £1.3m and it is intending to move directly to making its first three investments in social enterprises in Bristol.

The Resonance Bristol SITR Fund will remain open for eligible investors at quarterly intervals through the rest of 2016 with the aim of raising a total of £5m this year, and will then grow further in response to both the need for investment from social enterprise and investor demand.

Since the Fund launched in August 2015, the Resonance team has focused on an initial shortlist of 26 Bristol based social enterprises with which it is discussing investment from the fund. These are all businesses intentionally tackling issues known to be root causes of poverty, such as access to the job market for vulnerable people, affordable accommodation and youth engagement. They also cover a wide range of sectors from retail and healthcare to arts and media.

The Fund has been designed and run by Resonance, which has a 14 year track record specialising in social impact investment and now has almost £100m of funds under management across 5 operational impact investment funds. The development of the Resonance Bristol SITR Fund has been sponsored by UBS Wealth Management, which is also making it available to clients.

The Fund uses tax relief measures first introduced in 2015 to incentivize investment in charities, community interest companies and community benefit societies on terms that work for them. It has targeted a post-tax Internal Rate of Return of approximately 8% (overall rates of return may vary depending on the investor’s individual tax circumstances). It enables sophisticated investors to invest tax efficiently into a portfolio of social enterprises seeking to tackle poverty in the Bristol area. Like all investments there are risks, but the fund offers exciting opportunities for attractive returns and targeted social impact.

Simon Chisholm, Resonance Investment Director said: “We are delighted to have reached our first close for this fund and to be able to start backing Bristol social enterprises which are intentionally helping to rebuild lives and bring change for the better through real businesses. Being the first fund of its type to utilize the benefits of SITR at scale, we have seen significant participation in this close from both individuals and also the financial advisors and wealth managers who assist them. They can see this is about making their investment portfolio work to tackle issues they care about, whilst benefiting from tax relief as they would with other comparable investment tax structures such as EIS and VCT.

Equally importantly, its making finance available on terms which work for established social enterprise who need investment to grow.”

Tom Hall, Head of UBS Philanthropy Services UK said: “UBS are delighted that the Resonance Bristol SITR Fund has reached this important milestone and our clients have responded positively to both this opportunity and social investment in general. In the future we see social impact emerging as a third investment paradigm, along with risk and return, and believe this market will continue to grow.”

Resonance has begun work to establish similar funds in other locations with a long term view to grow £30+m of SITR Funds in cities across the UK. The success of this first fund in Bristol and the expected lifting of the EU cap of £275,000 of investment in individual organizations later this year will mean that this new part of the financial landscape will be growing fast this year.