If you’re keen to invest directly in projects that are working to create positive change in the UK, you can do so through an Innovative Finance ISA (IFISA).
An IFISA is a type of ISA that allows you to include investments that have been made via crowdfunded bonds or peer-to-peer loans. As with any ISA, you can invest up to £20,000 per year without paying any tax on your returns or interest. They can be a great way to add some
Bear in mind that IFISAs are riskier than cash savings and the level can vary dramatically, so make sure you read the risk description of the one you are interested in carefully.
Here we round up our top five investments for a green IFISA:
1. Affordable loans – Ethex
Positive impact investment platform Ethex has a bond offer in Great Western Credit Union (GWCU), which provides ethical, affordable and fair loans and saving products. GWCU helps to give families struggling with the cost of living crisis in the South West of England an accessible, regulated and caring finance alternative. It provides education on financial well-being and helps to break the cycle of debt for low-income households.
The forecast return on investment is 6.5 per cent. The investment is currently in overfunding, having hit its target raise of £800,000. Investments in the bond offer will be matched pound for pound by social investment from Fair4All Finance, up to a total of £1 million. Minimum investment is £250.
2. Solar energy for schools – Ethex
Ethex also has bond offer available in community benefit society Solar for Schools. Set up in 2016, it helps UK schools decarbonise and save money by installing solar panels and educating pupils on the sustainable energy transition. The investment will promote energy independence by funding solar panels on around 20-25 more UK schools.
Solar for Schools uses these panels as an educational instrument, helping the next generation understand sustainable energy. It also helpsschools save money on energy bills by generating their own clean energy that’s cheaper than they would otherwise pay.
The forecast return on investment is up to five per cent. Minimum investment is £500.
3. Education finance – Lendwise
Lendwise, which launched in 2018, matches private investors with borrowers who want to fund their studies to further their career and therefore their earnings potential. It is the UK’s only peer-to- peer lender to specialise in education finance.
The platform provides fair and flexible loans to students who have the personal merit to take postgraduate courses at top business schools and universities in the UK or internationally – but maybe not all of the funding.
Meanwhile, lenders can target a competitive return on their investment of around six to 12 per cent while also making a positive social impact. The minimum initial investment is £1,000.
4. Net zero councils – Abundance Investment
Sustainable investment platform Abundance is offering a five-year investment to help Lewisham Council reach net zero through sustainable transport projects. Lewisham Council is aiming to decarbonise transport – a sector which makes up 35 per cent of emissions across the borough.
This investment will help finance projects from the council’s Active Travel Fund. This supports a range of sustainable transport initiatives to promote active travel, reduce reliance on cars and provide infrastructure for greener transport options.
The Lewisham Climate Action 2028 is targeting returns of 4.3 per cent per year. Minimum investment is just £5.
5. EV charging – Abundance Investment
Abundance is also offering an eight-year investment in plymouth-based EV charging firm Wenea with estimated returns of 8.2 per cent IRR*.
Plymouth is aiming to improve its electric vehicle (EV) adoption rate by providing residents with easier access to sustainable transport. Wenea is raising up to £4.5 million to install and maintain 150 mainly rapid EV chargers at new transport hubs across the city.
Minimum investment is £5.
Risk warning: Your capital is at risk and unlike other ISAs, IFISAs are not covered by the Financial Services Compensation Scheme (FSCS).
* IRR is a financial metric used to estimate the profitability of future investments. It takes into account the value of money over time.
