Six ethical investment IFISAs
While the global transition away from investing in fossil fuels to more sustainable alternatives is still lagging, investors who wish to back ethical or eco-friendly businesses can do so tax free via several Innovative Finance ISA (IFISA) options.
These range from investments in green energy to social housing and education finance. Minimum investments start at £1, while the return rates for investors range between six and nine per cent.
Thanks to peer-to-peer lending, investors in all income brackets can support ethical projects while enjoying bumper tax-free returns.
Read more: IFISA Guide
We have found six IFISAs which enable investors to enjoy solid returns while supporting environmentally friendly or otherwise ethical projects.
An IFISA is a tax-free wrapper that allows UK investors to lend money through Financial Conduct Authority-authorised P2P lending platforms. They can receive interest and capital gains tax free, up to the current annual ISA limit of £20,000.
Here are the IFISAs that make investors returns in both cash and karma!
Abundance
Abundance was founded in 2012 with the objective of supporting ethical investments, specifically – green energy. From just a £5m minimum investment, the crowd bonds platform allows lenders to fund green energy and infrastructure projects. Among its eligible IFISA investments are those with three councils, providing community municipal bonds that support renewable energy projects in a local area. However, its 2020 partnerships with West Berkshire and Warrington Councils are not currently ISA eligible. The platform has a target return rate to investors of eight per cent.
Assetz Exchange
Assetz Exchange is a crowdfunding property investment platform focused on the purchase and leasing of housing with social impact. In May, Assetz Exchange reported it had enjoyed a record year so far, with more than £4m in property purchased and leased. Its portfolio includes social, student and elderly and mental health social housing. You can invest in an IFISA from a minimum of £1 and the platform targets returns of up to six per cent.
Energise Africa
Energise Africa – also known as Lendahand Ethex – is a joint venture owned by European impact investing platforms Ethex and Lendahand. This ethical investment platform offers investors annual returns of up to six per cent for funding clean energy projects in Africa, which can be held in an IFISA wrapper. Chief executive Lisa Ashford told Peer2Peer Finance News last year, that 2023 would see investment in key strategic growth initiatives, including some innovative product development to expand the platform’s investee and investor base. Minimum investments start at £50.
Folk2Folk
Folk2Folk is vocal about supporting communities through its business and property lending and it also offers loans for renewable energy and green projects. In a recent interview, chief executive Roy Warren told us the platform was hoping to attract as much IFISA investment as possible this year. You can invest in a Folk2Folk IFISA from a minimum of £20,000 and the platform targets returns of up to 7.5 per cent.
Lendwise
Lendwise focuses on education finance, helping to enable young graduates to enhance their skills and build their earnings capability without burdening them with the unfair loan terms often offered by traditional lenders. With student debt already a massive burden on young people, Lendwise offers loans to graduates who are keen to improve their earning potential and make a difference in the wider world. It accepts a minimum investment of £1000 and targets returns of up to nine per cent.
Triodos Bank
Triodos Bank is an ethical bank with 747,000 customers, active in five European countries. It has made £8.5bn of loans to projects across Europe benefitting people and planet. It backs projects and businesses in which a social impact is embedded in the business model, such as renewable energy or community-based charitable social enterprises. You can invest in a Triodos IFISA from a minimum of £50 and the bank targets returns of up to six per cent.
