Social Investment Tax Relief (SITR) A help or a hindrance?

We thought we knew what a Social Enterprise was and the social economy, as a whole, was growing nicely until government decided to tell us what a Social Enterprise is.  They introduced Social Investment Tax Relief (SITR) and said that it was available for Social Enterprises and then said  Charities and CICs only. That fragments the sector because it is being said that Social Enterprise is an entity that earns income for the social entrepreneur but is not available for the creation of capital.  To provide social benefit it is necessary to generate revenues and to create capital.

So I am an advocate of the Hybrid, which is a means of doing business in a different way following the global financial crisis in 2008.  It predicates a viable business that provides social benefit and a return to investors and it is fine that return can be enhanced by tax relief as with EIS and SEIS but the restrictions on SITR to Charities and CICs has skewed the sector.

There is an old aphorism which was never truer than this case which is; don’t like the tax tail wag the dog. The recent advent of SITR does little to increase the awareness and confidence of social impact investors in the social economy.  Social Impact investing is the provision of finance to generate social and financial returns delivering measurable solutions to societal challenges by the creation of measurable social impact.  Social investment brings benefits for investors and investees.

The need is to provide affordable and accessible products.

Do you think that the introduction of SITR has helped or hindered the public’s view or perception of social entrepreneurs and social enterprises?

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