Alternative investors unite for new £10m crowdfunding venture
THREE of the fastest growing crowdfunding platforms in the UK – including one based in Staffordshire – are to partner with Big Society Capital as part of a unique £10m Crowd Match Fund to allow the public to invest directly in charities and social enterprises.
Crowdfunder, Ethex and Tamworth-based ThinCats (through Community Chest) will help connect people with the causes they really care about by listing social sector organisations who want to raise debt and equity finance.
The £10m fund will see Big Society Capital match crowdfunded investments made by individuals into Social Investment Tax Relief (SITR) eligible charities and social enterprises. It will be the first of its kind to match different investments made by the public across the social sector. Private investors will qualify for Social Investment Tax Relief (SITR), which offers a 30% tax break.
The Chancellor recently announced an increase in the amount that younger charities and social enterprises can raise through SITR to £1.5m from April 2017.
Ben Warren, Investment Associate at Big Society Capital, said: “This fund marks a totally new approach for social investment and crowdfunding. By bringing together the experience and knowledge of these three partners we want to open up opportunities for the public to invest in a huge variety of causes they feel passionate about.
“We hope that this initiative will help charities and social enterprises to find new routes to investment which could offer better value and engagement from their local community. We know that donation-based crowdfunding was the fastest growing model of alternative finance in 2015, and we are excited about the potential for this fund to create similar momentum in the social investment sector.”
Recent Nesta research shows that the UK alternative finance sector grew by 84% in 2015, with £3.2bn in investments, loans and donations.
Kevin Caley, CEO of Community Chest and founder of peer-to-peer lender ThinCats, said: “By providing loans to enterprising projects with a clear mandate for social good, Big Society Capital has provided an exciting new source of finance for social enterprises and charities, many of whom have struggled for funding during recent years.
“This makes it the perfect partner for ThinCats, and Community Chest in particular, which connects investors in search of financial returns with social enterprises in need of funding. By doing so Community Chest is providing a tax-efficient way to make a difference in the community, allowing private investors the opportunity to support a good cause while potentially earning a return on their investment.
“The new Crowd Match Fund is a real step change for social funding and could become the lifeblood for dozens of social projects in the years to come.”
