One of the most eye-catching elements of last week’s Social Enterprise Action Plan, was the prospect of extending tax relief to investors in social enterprise. Must confess, the day after it has been anounced that the Treasury will handing back £4.5bn in tax relief to drinkers (VAT) and land speculators (no corporation tax), the subject makes me feel a bit ill. Could do some useful stuff with £4,500,000,000
Many social enterprises will never be able to offer high investment returns. But give a 40% tax payer Community Investment Tax Relief (CITR) and that investment decision is transformed from philanthropic gesture to common sense. It’s equivalent to almost 8% a year return on your money. Being able to access CITR is the principal reason the likes of Charity Bank have been able to increase their asset base from £8m to £20m.+ in recent years.
The impact would be major both for individual shareholders under a CIC model, and just as importantly for community share issues – a massively underused tool in our sector. We say we are adding community value, so why don’t we ask the community to value our enterprise by sticking in their money (very easy to do as an Industrial and Provident)? The glib answer is that our communities don’t have the money and expect some return on it if they do. Well the challenge is to find people who do have the money and look to CITR for help with the rest.
Camberwell is involved on a voluntary basis with Headingley Development Trust. We should be going for two share issues in the near future. One to take over a shop, the other to refurbish an old school as an enterprise and arts centre. HDT will be hitting individuals, businesses and institutions. We’ll keep you posted how it goes.
Chris
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