A new social investment vehicle by the name of Crowd Match Fund is seeking partner platforms to aid in the distribution of £5m in funding.
The new fund will match crowdfunded investments, made by individual investors, with social investment tax relief (SITR)-eligible charities and social enterprises. Crowd Match Fund has been spun out of Big Society Capital – an institution built to bolster social investment in the UK. Big Society has now opened its doors to proposals from whichever alternative finance platforms fancy themselves capable of channeling a portion of the £5m into appropriate projects. Those platforms may be equity crowdfunders, peer-to-business lenders or, more broadly, “alternative finance platforms”. This final bracket won’t include the nation’s many and various direct lending models, as the Request for Proposals clearly stipulates that prospective partners will allow the platform to invest directly in charities and social enterprises – via the SITR wrapper.
SITR can include such benefits as income tax at 30% of the total amount invested, capital gains disposal and holdover relief. Ben Warren of the Big Society Capital investment team, comment on the Request for Proposals:
“We are excited to launch the request for proposals for the Crowd Match Fund and partner with innovative crowdfunding and peer to peer lending platforms listing social ventures. These lending platforms are a great way to help connect people with the causes they really care about. We want to work in partnership with platforms and match £5m into charities and social enterprises that are eligible for social investment tax relief. We believe this could unlock a whole new market for engaging the public in social investment.”
Big Society’s Request for Proposals asks platforms to divulge information on management experience, on deal flow, and on how prospective partners plan to make use of the funding.
The Crowd Match Fund represents an intriguing developmental angle for the alternative finance industry. Many of peer-to-peer platforms are beginning to diversify in terms of borrower type. RateSetter, for instance, currently has 40% of its outstanding loans allocated to businesses – having initially started out in the consumer lending space. The SITR alone may prove enough to convince such players to chance a foray into the social investment space.
You can access the Request for Proposals in full here.