Social Finance fund will allow private investors to put money into social enterprises

Social Impact VCT will be a venture capital trust, providing tax breaks to individuals investing in growing firms

A fund that will allow private investors to put money into social impact bonds and other social investments has been launched by Social Finance, the organisation that created the concept.

Social Finance and the FSE Group, a not-for-profit fund manager, have launched Social Impact VCT, which is intended to raise up to £20m to invest in social enterprises and businesses with a social purpose.

The fund will be a venture capital trust, a vehicle intended to provide tax breaks to individuals investing in small, growing firms.

It is open to 'retail investors' – ordinary individuals who are not considered sophisticated investors – and will generate 30 per cent income tax relief on a typical investment of £2,000. In addition, dividends and capital gains are tax-free.

It has been set up because the vehicles created to enable charities to invest in social impact bonds are not suitable for individual investors.

In a statement, the organisation said its investment policy was "to invest in social enterprises and socially motivated companies that engage with people who are marginalised, vulnerable or disadvantaged, work in local communities to support cohesion, promote socially motivated brands and improve health and education provision".

It will invest in established social organisations looking to expand and organisations that will get their revenue from confirmed contracts.

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