Achieved through a pilot Bristol based social investment fund structured to take advantage of social investment tax relief.

In the first deal of its kind, Bristol based charity FareShare South West, which tackles food waste, has today, Monday 10 November, received an investment of £70,000 from a small group of angel investors piloting a social investment tax relief (SITR) fund, to be set up and managed by impact investment company Resonance.

The Bristol pilot was set up to identify the demand for social investment from local social enterprises, and to understand how different fund structures might impact on scaling up the social impact achieved by investees.

Seen as a potential way of providing a vehicle to channel the city’s wealth into the growth of social enterprises that are successfully tackling social and economic deprivation at the heart of local communities, the pilot had an initial investment pot of £200,000.

In its new report “A Social Investment Fund for Bristol”, Resonance sets out its findings from this pilot phase including the detail of the two deals done. After considering the benefits to be generated from the recently implemented SITR, Resonance concluded that an ‘SITR Fund’ is the best next step to scale up this type of initiative in Bristol. As a result, Resonance has set its sights on building a series of city based SITR funds starting with Bristol and aims to launch the first SITR Fund in early 2015.

Daniel Brewer, Managing Director at Resonance, said: “There was a strong preference for investing in a pooled social investment fund, rather than directly investing in social enterprises on a deal by deal basis. This supports a strategic approach to social impact, ensuring diversification of risk across a portfolio and reducing the costs of deal structuring for individual projects.

“The pilot study showed how Social Investment Tax Relief has the power to channel new finance to growing social enterprises. SITR in this case has made the deal more attractive for both the social enterprise and the social investors. It can help drive down the cost of much needed capital for social enterprises, whilst also delivering a risk adjusted return to investors.“

The first beneficiary, FareShare South West, diverts surplus food that the food industry would otherwise waste, to organizations that work with vulnerable people. They have also developed a catering arm, where surplus food is used to provide a fine dining experience at festivals and larger scale events, as well as general catering services at smaller events. FareShare also offers work experience and job opportunities for vulnerable individuals who have been excluded from the jobs market.

Jacqui Reeves at FareShare South West said: “We needed investment to scale up our activities and to achieve our aims of addressing the imbalance by redistributing quality surplus food to groups working with vulnerable individuals in and around Bristol. The investment will help us create real jobs and work experience opportunities for vulnerable people who previously were unable to work.”

Matt Robinson, Head of Strategy and Market Development at Big Society Capital, said: “This is a milestone moment for the social investment tax relief. It is particularly exciting to see it being used in the way it was intended: enabling a small charity to access unsecured lending, so that they can grow and increase their social impact. Congratulations to FareShare South West, Resonance and all others involved. We look forward to seeing many more charities and social enterprises making the most of the tax relief to access social investment.”

Resonance has been considering developing city focused impact investment funds for some time, and Bristol presents a particularly strong case for being the base for the first of these.

Daniel Brewer explains: “There is a thriving social enterprise scene developing in Bristol. Creative business models are being developed across the region, in order to tackle social issues in a sustainable way. Whilst not all of them would be deemed ‘investment ready’, we are encouraged by the large number of social enterprises delivering social value in key impact areas. They presented real potential to deliver both social impact as well as financial return to prospective investors. This provides strong evidence of a healthy pipeline of potential deals for a locally focused impact investment fund.” The Severn Project CIC also received a loan of £80,000 to expand production capacity of its urban farms, which provide fresh local salad to restaurants, shops and distributors in Bristol, while creating employment for people with significant barriers to the workplace. However, this deal could not take advantage of SITR because its core income generating activity is agricultural, which is currently not eligible, but under review. Had SITR been available, the investment.

The Severn Project CIC received could have been both larger and less expensive.

About FareShare

FareShare South West is an independent franchise of the national charity, FareShare.

We work with the food industry to minimise fit-for-purpose fresh, frozen and long-life food going to waste, and send this food into organizations working with the most vulnerable people in the community. Thousands of tonnes of perfectly good in-date food are wasted in the South West each year due to packaging errors, out of date promotions, discontinued lines, veg not up to spec. and so on. At the same time, there are over 4 million people in the UK who cannot afford a healthy diet, among them homeless and elderly people, children, refugees and people suffering mental & physical health problems.

FareShare South West aims to address this imbalance by redistributing quality surplus food to groups working with vulnerable individuals in and around Bristol.

We only have a few employees and rely heavily on our volunteers. Each week around 50 people help us re-distribute the food throughout the South West. Around half our volunteers are or have been vulnerable and we offer training opportunities and support in their lives.

FareShare South West, based in Bristol, was set up in late 2007 to work with community groups in and around Bristol city. We support over 70 organizations, including hostels, day centres, lunch clubs, addiction agencies, young peoples projects & refugee centres, in delivering a food service to those who need it most and giving support on nutrition, food hygiene and more. Our service enables these organizations to get people through the door and also to redirect their funds into improving their own services.

To learn more about FareShare South West, please visit their website.