Global firm UBS backs UK social investment tax relief deal

International wealth management firm UBS this week announced it is sponsoring social investment specialist Resonance to develop a series of social investment tax relief (SITR) funds in the UK.

The first fund is to launch in Bristol in the first quarter of this year, with a further six to eight funds to follow. 

Each fund will be invested in social enterprises working to tackle inner-city poverty in the UK and will be worth around £5m. If the European Union sanctions the UK government’s Autumn Statement proposals to extend the SITR then each fund could be larger.

CEO at Resonance Daniel Brewer said: “SITR is the key to the development of these funds. It simultaneously drives down the cost of capital – the funds will offer loans with interest rates between 4% and 7%, unsecured – for social enterprises who need funding to scale up the impact of their projects, and reduces the risk for investors in that they receive 30% of their return up front through the tax relief.”

The funds' investors will be providing financial backing to social enterprises working to promote health and well being, address the needs of addicts and ex-offenders, improve access to affordable accommodation, alleviate long-term unemployment and reduce cost of living for individuals on low incomes.

The announcement of this series of funds follows an 18-month pilot phase that included the first ever SITR deal between a small group of angel investors and FareShare South West, which diverts food waste to organisations working with vulnerable people.

UBS has had a global impact investing team for three years, which has up to this point mostly focussed on impact investing in developing countries. Andreas Ernst, head of impact investing at UBS, told Pioneers Post that this was the first year in which the firm was focussing on opportunities in developed countries “including Italy and Israel” as well as the UK. 

By working with impact investment specialists Resonance, UBS is able to support with the structuring of funds and take on a crucial advisory role. “We like to work with specialist third party managers but we also want to play a key role in co-creating and co-designing the funds,” said Ernst.

Jamie Broderick, CEO of UBS Wealth Management, said: “Following a very successful launch of our UK philanthropy services in 2014, we wanted to widen the opportunities for our clients to use their wealth to deliver a positive social impact. 

“The SITR funds will hopefully enable them to do this whilst as the same time realising a clear financial return.”

The sponsorship of the SITR fund is part of the “broader picture” of UBS’s impact investment strategy, which at this point “remains relatively small in scale” but is becoming “increasingly important,” Ernst told Pioneers Post.


Header images: Recipients of one of FareShare South West's projects eliminating food waste.

Photo credit: FareShare South West