This Monday afternoon marked the anniversary of the GET SITR campaign, hosted by Big Society Capital (BSC) at The Bulldog Trust building to celebrate the success of the SITR scheme and to honour the trailblazers and early adopters of SITR (Social Investment Tax Relief).

SITR is a tax relief for social investment which encourages investors to support social enterprises and helps qualifying organisations access capital.

The event featured a range of speakers including private investors, fund managers, financial advisers and social enterprise founders, all of whom shared their stories about working in the SITR sector.

Cliff Prior, CEO of Big Society Capital, started the event with a welcome address that highlighted the significant achievements of the scheme over the past two years: 30 deals have raised £3.4m across the UK.

Raising Investment with SITR

Ben Ferris, Director from South Bristol Sports Centre (SBSC), and Matt Fountain, Founder and Managing Director at The Freedom Bakery shared their practical experiences in raising investment with SITR. Although the two had distinct visions and problems to solve, they were both refused by high street banks due to their untested and unconventional business models. SBSC is a not-for-profit organisation provides sport facilities to the public and offers free coaching and ‘off the street’ programme to teenagers. The Freedom Bakery trains prisoners and ex-offenders to make artisan bread, which increases the employability of prisoners and reduces re-offending rates. The SITR scheme allowed the two companies to grow and fulfil their missions. Both companies are now generating stable revenues and seeking further expansion.

Panel Discussion

The panel discussion was chaired by Evita Zanuso (BSC) with panelists Simon Rowell (BSC), Richard Child (Paradigm Norton), Roger Goodyear (Scottish Boat Festival) and investor Harold Immanuel. Simon noted that the success of SITR is attributable to a need among charities and social enterprises for a particular type of capital and pointed to the success of other tax relief schemes such as EIS and VCTs as a model. Roger added that the benefits of SITR extend beyond tax reliefs, as social enterprises like his help problem children learn social skills and transform local festivals that are economically beneficial to the community. Harold, speaking from a social investor’s perspective, stated that tax relief isn’t the fundamental rationale for investing in SITR funds. Instead, contributing to community and creating social impact are the ‘fun bit’. Finally, Richard explained how tax reliefs lessen investors’ risk burden and noted that SITR investments are more suitable for people who are financially independent.

The State of SITR Report

Plum Lomax, Deputy Head of Funders Team at NPC, noted the following key findings in the report:

1. Charity is the most common organisational form for social enterprises (54%), the remaining two forms (Community Interest Company and Community Benefit Society) are in equal proportion (23%).
2. The scheme is geographically diverse with most deals (11) in Scotland and followed by South West (6). London, however, has only 1 organisation which has received SITR funds.
3. The average revenue of organisations that have completed SITR deals is £615,000 and the average number of full-time employee is 10 (many organisations are volunteering based).
4. 82% of money raised is in the form of loans and 9% is for community shares and social impact bonds.
5. The average time taken on pre-assurance from HMRC is 7 weeks.

Conclusions

The SITR sector is still a small universe despite its recent achievements. To get more enterprises and investors involved in SITR, the sector needs to educate both parties. However, the sector is not short of opportunities, nor passionate investors, instead what it lacks at the moment is a clear model that investors and entrepreneurs can follow.