CITR: A tax relief which benefits society, with Katy Ford

The Responsible Finance Podcast

Want to invest in an organisation supporting under-served businesses and disadvantaged communities - and be rewarded with an attractive tax relief for doing so?

Community Investment Tax Relief is the answer, according to Katy Ford, chief executive of Foundation East. Foundation East lends to and supports small businesses unable to access mainstream finance.

Their CITR Investors can receive up to 25% tax relief spread over 5 years - and unlock affordable finance for businesses which would otherwise be unable to access it.

In this episode, Katy gives examples of the businesses which are now thriving thanks to a loan and support from Foundation East; describes how CITR works (and how Foundation East has attracted investment); and gives her views on how responsible finance providers should innovate and collaborate.

Here are the full timings:

• 1:40 Foundation East is a Community Development Finance Institution, also known as a "responsible finance" provider. It lends to small businesses unable to access mainstream finance.
• 2:20 Why does Katy do the job she does?
• 3:15 Katy was brought up on Guernsey and became more and more aware of the divide between "the haves and the have-nots."
• 5:25 Examples of small businesses, unable to access mainstream finance, which have borrowed from Foundation East.
• 10:31 Why now is an especially interesting time for Foundation East.
• 11:10 Foundation East is a mutual society with a legal structure as a “bencom” - society for community benefit. It can sell shares in the mutual society; those funds are used to invest in (lend to) small businesses. Foundation East offers 2 types of shares including Community Investment Tax Relief (CITR) shares.
• 11:40 What is Community Investment Tax Relief? How does it work?
• 12:30 What are the challenges when talking with potential investors, or potential advisors to investors?
• 13:25 Comparisons with EIS and SEIS schemes.
• 14:10 The minimum and maximum investment levels for CITR investments into Foundation East.
• 15:30 Whatever level of investment a member makes they get one vote.
• 16:30 The difference between withdrawal and transferable shares.
• 17:30 Foundation East’s shares were launched on Ethex at the end of March 2019.
• 18:45 How Foundation East is reaching out to potential investors.
• 19:45 “It’s up to us as a sector to push this tax relief.” How is Foundation East working with other Responsible Finance providers?
• 22:08 CDFIs have great stories and can evidence the work they do has enormous impact on people’s lives: jobs created, wellbeing improved, and more.
• 24:20 The misunderstanding that any business which cannot access money from a mainstream source is completely wrong says Katy. Yet sadly some accountants and advisors - and some in Government - still have this perception. This is why the Responsible Finance sector is essential.
• 26:00 Foundation East has already attracted over £200,000 via the CITR share offer. Where’s the money mainly coming from? And has there been a particularly effective route to market?
• 29:20 How Katy believe responsible finance providers must innovate and collaborate.
• 31:15 further examples of businesses and social enterprises supported and enabled by Foundation East.
• 33:50 How to get in touch with Foundation East