This paper provides a review of the use of Social Investment Tax Relief (SITR) on its two year anniversary. It includes an analysis of the SITR deals completed to date and the views of key stakeholders in this area. NPC has written this report in partnership with Big Society Capital (BSC).
NPC estimates that £3.4m has been invested across 30 organisations to date in SITR deals—these include both direct investments in enterprises and investments through SITR funds.
The average turnover of an enterprise raising SITR capital is £615,000, with assets of around £1m and the majority have less than 10 employees. Enterprises to date have been highly concentrated in two regions (Scotland and the South West) due to the prominence of the fund managers Social Investment Scotland and the Resonance Bristol SITR Fund—however the pipeline of future deals appears more evenly spread across the UK.
The amount of capital raised in an average deal is just over £100,000. The average cost of capital is 4.8% pa over a five year period. Deals take around four months to complete. About 80% of deals to date have been loans, with the rest community shares or social impact bonds (SIBs). The average size of investment by an investor is around £20,000, but has been as low as £230 in community share offers.