CFG highlights tax relief for social investment as overly restrictive

5th September 2013

The umbrella body has also called on the Government to do more to increase demand for social investment among charities.

In its response to the consultation on a tax relief for social investment, supported by a letter to Chancellor George Osborne, CFG has highlighted concerns over several proposed characteristics of the relief which are likely to severely undermine its potential. 

CFG CEO Caron Bradshaw said: “Social investment offers a potentially valuable opportunity for some charities, particularly those looking to expand or innovate. However, as the proposals currently stand, we are of the view that uptake of this potentially valuable relief will be highly restricted, causing it to become a missed opportunity to bring new income into many charities.”

CFG has called for changes in four main areas of the relief:
  •  Allowing simple unsecured loans to qualify for the relief
  •  Raising the maximum level of investment permitted through the relief
  •  Allowing large charities to receive investment through the relief
  •  Removing proposed exclusions on qualifying activities

Caron Bradshaw continued: “We would also urge the Government to carefully consider the rate at which it sets the relief in relation to Gift Aid, to minimise the concerning potential for charitable donations to be switched to investments.

“Additionally, we feel that there needs to be stronger efforts by the Government to stimulate demand for social investment among charities. We are therefore calling on the Government to commit to establishing a more comprehensive and joined-up system of social investment support for charities, at all stages of their development.”

CFG has called for the Government to:
   •  Develop a comprehensive programme of early stage support for small charities which are looking to expand.
  • Increase support to frontline charities to help them access social investment, for example, by committing to expand the Investment and Contract Readiness Fund, though not at the expense of other support to charities.
  •  Open dialogue with the four major social banks to explore what can be done to encourage greater levels of unsecured lending to charities.
  •  Provide funding for a training programme for charities on social investment.
  •  Carry out research into the kinds of social investment which would best meet the needs of charities in different circumstances.

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Notes to editors:

1. Charity Finance Group; inspiring the development of a financially confident, dynamic and trustworthy charity sector. Charity Finance Group works with finance managers to enable them to give the essential leadership on finance strategy and management that their charities need; promoting best practice in charity finance, driving up standards, campaigning for a better operating environment and ensuring every pound given to charity works harder - it’s essential to maintain the trust of charity donors. CFG has more than 2,200 members, all senior finance professionals working in the sector and collectively our members are responsible for the management of over £19bn in charitable funds.

2. CFG’s full response to the social investment tax relief consultation can be seen here.

3. CFG’s letter to George Osborne MP can be seen here.

4. Please contact Doug Hull ( , 0207 250 8333) with any queries or for further information.

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