# Charities Aid Foundation creates social investment fund

- Link: https://fundraising.co.uk/2011/06/20/charities-aid-foundation-creates-social-investment-fund/
- Published: 2011-06-20T13:28:33+01:00
- Author: Howard Lake

The Charities Aid Foundation (CAF) has launched a social investment fund, the CAF
Social Impact Fund, to enable philanthropists to invest in providing loans for charities
to help them become stronger and expand. Once loans are repaid the funds will be
recycled enabling philanthropists to support more charities. In this way a £50,000
investment could result in over £150,000 being loaned to charities over three years,
or over £220,000 over five years.

 

Since 2002, the Charities Aid Foundation has, through its social investment arm 
CAF Venturesome, provided over £22 million in loans to over 280 charities, community
groups and social enterprises. Traditional lenders would not have been likely to
make these kinds of loans.

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These loans have been financed by grantmaking organisations, businesses and a small
number of individuals. The CAF Social Impact Fund widens this potential pool of 
funders, allowing all major donors to use their philanthropic capital for a social
return.

 

Donors who already hold or who open a CAF Charitable Trust will be able to make 
an investment into the fund of £10,000 or more for a fixed period of between three
and six years. When the term is completed, CAF Venturesome expects the funds to 
be returned to the investor’s charitable trust in full for them to either reinvest
in the CAF Social Impact Fund, or to donate to charities in the traditional way.

 

So far CAF Venturesome has experienced less than four per cent of defaults on its
loans across the risk spectrum. The CAF Social Impact Fund will provide loans to
the lower end of this spectrum.

 

A £50,000 investment by a higher-rate tax payer returning their tax relief to their
CAF Trust account, could mean £83,898 becoming available for the CAF Social Impact
Fund to lend to charities. Assuming loans are recycled, CAF’s anticipates that a
£50,000 investment could result in over £150,000 being loaned to charities over 
three years, or over £220,000 over five years.

 

John Low, Chief Executive of the Charities Aid Foundation said: “Through CAF Venturesome,
the Charities Aid Foundation has for many years been at the forefront of innovation
in social investment. The CAF Social Impact Fund marks a new stage of development
in this area, by enabling some of our major donors to invest their philanthropic
capital, many more charities and social enterprises will have access to affordable
loans.”

 

www.cafonline.org/socialimpactfund

 

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