Charities and social enterprises have raised about £3.4m through social investment tax relief since its introduction two years ago, according to new figures from Big Society Capital.
The report Social Investment Tax Relief: Two Years On, which was produced in partnership with the think tank New Philanthropy Capital, says that 30 organisations have used the scheme, which allows charities and social enterprises to raise finance from individual investors by offering the investors 30 per cent income tax relief on loans or equity investment in their organisation.
The report says that about 80 per cent of the deals so far have been loans, with community shares and social impact bonds accounting for the remainder. The amount raised in an average SITR deal is about £100,000, the report says.
It says that the average SITR capital-raising enterprise has a turnover of £615,000 with assets of about £1m and with the majority having fewer than 10 employees.
The report also suggests that increasing the investment limit for SITR would "encourage more deals to take place". EU rules state that enterprises can receive only about £250,000 over three years.
In the 2014 Autumn Statement, George Osborne, the Chancellor of the Exchequer, said he would try to increase this total to £5m a year for each organisation and £15m in total.
A survey of the 260 organisations involved in Big Society Capital’s Get SITR campaign found that a lack of the necessary expertise or knowledge about finding investors was the most common barrier to raising SITR investment.
Simon Rowell, interim head of strategy and market development at Big Society Capital, said the evidence showed that SITR was working.
"It’s encouraging to find that smaller charities and social enterprises have been able to navigate the tax relief rules and are already finding SITR to be a useful new tool to help them grow," he said.
"The affordability of SITR products is highly promising. There are now big opportunities for investors to follow the early leaders and use their investment account to support charities and social enterprises they believe in."