The government has published a strategy for growing the social investment market this month which recognises the positive impact of tax relief as an incentive. One of these tax relief schemes, however, is now under threat.
The Community Investment Tax Relief (CITR) scheme encourages investment in disadvantaged areas that would be unlikely to take place without it. The scheme works by giving tax relief to investors who back enterprises in these communities by investing in accredited Community Development Finance Institutions (CDFIs), such as Charity Bank.
Charity Bank is the biggest user of the CITR scheme and has raised £53.3 million in deposits since 2003. These funds have been lent to charities and social enterprises operating in deprived areas and touched the lives of at least three million people across the United Kingdom. 40% of these organisations have reported that their project would not have happened without Charity Bank’s support.
The CITR scheme’s state aid exemption ends in March 2012 and is currently under review by HM Treasury to determine whether the government will apply for an extension of the programme. If the CITR scheme does not continue, the efforts of Charity Bank and other CDFIs in attracting social investment from private individuals will be undermined.
The take up of CITR is growing and with a few amendments the scheme’s reach can be even greater.
To help make this happen, Charity Bank is joining the Community Development Finance Association (CDFA) campaign to improve and extend the CITR scheme. The campaign has two objectives:
1) To recertify CITR (or similar tax relief scheme) when it expires in March 2012 to incentivise much needed private investment in communities and enterprise through CDFIs.
2) To adapt and improve the current scheme to allow for greater success.
If you wish to join the campaign there is a template letter attached below which can help you get started. We suggest you address it to the Chancellor with a copy to Vince Cable as sponsoring Minister of CITR (the addresses are on the template letter). You can use the letter as it stands or make an even more powerful statement by adding your own words and experiences. There are more details and alternative letter templates available on the CDFA site.
The CITR scheme makes social and financial sense. The social return on investment of Charity Bank loans unlocked by the CITR scheme averages more than six times the level of investment. It is these organisations that are at the forefront of delivering the government’s Big Society vision.
We welcome any support you can offer in calling for a tax relief scheme that effectively incentivises social investment from private individuals for the benefit of the disadvantaged communities served by Charity Bank and other CDFIs.
Chief Executive of Charity Bank
Update 23 March 2011: CITR tax relief saved in budget
We are delighted to announce that George Osborne announced in the budget that Community Investment Tax Relief will continue and that the government will promote its uptake. The budget document has one mention of relevance (p53):
2.39 Future of the Community Investment Tax Relief (CITR) 2.39 – The Government will renotify CITR to the European Commission and consult in advance of renotiﬁcation on how the scheme can be made more effective. (Finance Bill 2012)
We are grateful to all our supporters who have joined in the successful CDFA campaign to save CITR.