Raising the lifetime limit on social investment tax relief to £5m and removing age restrictions on applicants could result in 30,000 more charities and social enterprises benefiting, Big Society Capital has told the government.
In its response to the Treasury’s call for evidence on SITR, which closed on Wednesday, BSC said that the current limit of £1.5m was stopping some potential SITR managers from launching products.
This was because investments would need to be of a sufficient size to make them worthwhile for those managers to enter the market, according to BSC.
The current limit was set in 2017, when the government raised it from the original level of €340,000 (about £290,000) every three years.
Lifting the limit to £5m could generate between £6m and £20m from four community projects identified by a single social fund manager, BSC said.
Current restrictions meaning only social enterprises tht have been running for less than seven years can apply for SITR should also be scrapped, BSC said.
BSC said it was illogical to have an age limit in place for charities and social enterprises and this was "significantly limiting" take-up of SITR.
Take-up of SITR has been a concern for some time, with a report from Social Investment Business in January saying the first three years of the relief – introduced in 2014 – raised only £5.1m, despite Treasury predictions it would bring in £83.3m.
The report said that only 63 charities and social enterprises had made use of SITR so far.
Other proposals made by BSC include expanding SITR-eligible activities to include nursing and residential care homes, as well as some smaller-scale food production.
Renewable energy projects owned and managed by community organisations should be able to get SITR if not in receipt of government subsidies, BSC said.
It said that expanding SITR-eligible activities to include the hire of assets on a short-term basis could expand the size of the market by between £38.5m and £43.5m over the next five years.
Investors should also be eligible for SITR when investing in charities for which they are trustees, BSC said.
Cliff Prior, chief executive of Big Society Capital, said: "We believe that SITR has the potential to bring about great change in our society by helping organisations get the investment they need to tackle some of our most pressing issues.
"SITR presents another chance for the UK to be a world leader in the social impact investment space, a world leader in investing for good and improving lives and communities. We look forward to working with the government and the industry to develop a version of SITR that can help more social enterprises and charities achieve greater levels of positive social impact."