The fund, which is supported by a guarantee scheme from the government-owned British Business Bank, will typically support small-scale community projects.
Resonance, a UK-based social investor, has launched a £10m (€11.38m) evergreen fund to invest in organisations seeking to reduce inequality, improve health and wellbeing, and support the energy transition.
The Resonance Enterprise Investment (REI) fund, which is aimed at professional investors seeking to combine social impact with financial returns, has attracted investment from Unity Trust Bank, the Enterprise for Development charity, and The Ceniarth UK Foundation.
Investments are expected to be made across different regions in England, primarily through debt-based products.
The vehicle through which the fund operates is a Community Development Finance Institution, which enables eligible investors to claim 25% of their investment as tax relief through the UK’s Community Investment Tax Relief scheme. Investors are projected to achieve a typical target return of 7%, post-tax-relief, gross.
The fund is supported by the Growth Guarantee Scheme provided by the government-owned British Business Bank, and a grant from Access – The Foundation for Social Investment. The scheme seeks to provide around £500m of additional lending capacity to help smaller businesses across the UK.
Leila Sharland, acting head of growing enterprises at Resonance, said that, while social enterprises can deliver solutions for inequality, poor health and climate challenges, they often lack the right finance.
“REI changes that by combining tax relief with risk protection. It offers investors the chance to earn solid returns while supporting communities that need investment most,” she said.
Possible investments
Resonance said that initiatives under consideration for investment from the REI Fund include a small social enterprise brewery, which is expanding to create employment and support for adults with learning disabilities and autism, and the registration of a domiciliary care team specialised in end-of-life care with the Care Quality Council, an English regulator. Another possible target is a community wood project that trains the long-term unemployed and provides access to reused wood for local people.
Seb Elsworth, CEO of Access, said the fund has been part financed via their flexible finance programme. “Resonance’s approach will help social enterprises access the kind of patient, flexible finance they need to grow and deliver lasting impact. By combining our grant with backing from Unity Trust Bank and the British Business Bank’s guarantee scheme, this fund will strengthen the flow of capital into communities that need it most,” he said.
Diane Isenberg, trustee of The Ceniarth UK Foundation, said its provision of catalytic capital through the fund reflects the foundation’s focus on improving livelihoods for those in disinvested areas of the UK. “The type of community finance employed by REI is a key lever for development in these communities,” she said.
The fund follows on from Resonance’s previous social investment and tax relief funds and growth funds, which have made 123 investments, using £9.9my raised from 145 investors.
Other projects recently backed by Resonance include a scheme to employ ex-offenders to refurbish rundown housing stock, an community rooftop solar energy project, in addition to its core funding for affordable housing development.
