The Aspire Gloucestershire Social Investment Bond

“The World’s first”……..

Whenever I see this phrase my mind leaps to a series of possible conclusions. Will the second half of the sentence be proclaiming……..

  • A scientific discovery?
  • A sporting achievement?
  • A medical advance?
  • Yet more new technology?

social-impact-investmentRarely does the sentence end by celebrating something new in the area of finance!

All this changed last week with the launch of the first Social Impact Bond in the world to apply for the benefit of tax relief for a private investor.

Is this announcement exciting? To most people, probably not: which is why it hasn’t dominated headlines in the national press. However, in its own quiet way, I believe that, in time, we will look back on the launch of the Aspire Gloucestershire Bond as being of great significance in the mission to encourage society to “help look after itself”.

Investors are being invited to make loans to Aspire Gloucestershire over a three year period in order to support 150 disadvantaged young people. The aim is to provide homes for the young aged 18-25 who are homeless, or at risk of being homeless, but do not qualify for statutory provision, whilst also assisting them into education, training and/or employment.

In return for their loan, investors will receive a competitive rate of interest, together with the benefit of Social Investment Tax Relief (SITR). Return of capital is dependent upon the successful achievement by Aspire Gloucestershire of all their stated goals.

At Paradigm Norton we have remained close to these developments as they have unfolded. We sense that for some of our clients there will be an appeal to seeing part of their money invested to achieve more than just a financial return, particularly now tax relief is a possibility. We also remain healthily cautious. We are not experienced at assessing the viability or otherwise of social action projects, because this market is in its infancy, and need to make this quite clear to any clients who show an interest in becoming involved in this new area.

It is wonderful that Britain is leading the world in a new and worthwhile initiative, and that the members of the financial planning community and their clients have the opportunity to play a part. As with all things new there is much learning to be done. Not everything will go according to plan: it never does! However, for those clients who can identify a sum of money which will not be required to enable them to meet their main lifetime goals, and which they could afford to lose in the most extreme circumstance, there are likely to be opportunities in the near future to invest and to add value in new ways – ways which will have a positive impact upon society.

Maybe the Aspire Gloucestershire Bond – a World first – will herald the start of a new pattern, where individuals begin to expect a different sort of return on their investments.

RMT Ref: 82/10.14/SL

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