Halve the minimum limit for retail charity bonds, government urged

Charity

A group of major social investment organisations are calling on the government to halve the minimum limit for issuing retail charity bonds to £5m.

The Treasury and HM Revenue & Customs are consulting on potential changes to the regulations on the taxation ofsecuritisation companies, which are used by organisations looking to raise funds in capital markets.

As part of the consultation, the government is considering lowering the threshold that determines the minimum size for retail charity bonds, which can be used by charities to raise loan finance.

In a joint response to the consultation, the social investment wholesaler Big Society Capital, the responsible finance body Allia C&C, Social Enterprise UK and the Impact Investing Institute, which works to accelerate the growth of impact investing, said the minimum size should be reduced from £10m to £5m.

Adrian Bell, chief executive of Allia C&C, said: “We are campaigning for the limit to be brought down to £5m, making it possible for many more charities to raise unsecured, covenant-light funding from investors who are hungry for more responsible investment opportunities.

“I encourage every charity that might ever want to borrow amounts of £5m or more to make their voice heard by government and tell them it is unfair to be denied access to these investors.”

Stephen Muers, chief executive of Big Society Capital, said the charity bond market had thrived in recent years, but had the potential to grow further.

“We would urge the threshold to be lowered to £5m to enable more charities to raise financing from capital markets at a time when an increasing number of investors are seeking more impactful investments,” he said.

The full details of the consultation, which closes on 3 June, can be found here.

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