Risk warning: Your capital is at risk and unlike other ISAs, IFISAs are not covered by the Financial Services Compensation Scheme (FSCS)
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 variety and colour to your investment portfolio.
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:
Triodos – a Good With Money ‘Good Egg’ firm – has a bond offer in Thera Trust, UK charity that provides care, support and services for people with a learning disability. Thera helps to support people who have complex needs or have previously lived in institutional settings for a long time to live a more ordinary life.
Thera is seeking to raise £5 million to support the charity’s continued growth, enabling it to provide more care and housing for people with a learning disability. Some of the proceeds will also be used to repay the charity’s 2018 bond which is due for repayment in March 2024.
The estimated interest on the investment is 7.2 per cent per year over 5.5 years. Minimum investment is £50.
Positive impact investment platform Ethex has a bond offer with Fair For You. It provides vulnerable families, who can’t access mainstream credit, with flexible and affordable loans to buy essential household items such as cookers, beds and washing machines. to date, Fair For You has provided more than 250,000 loans (totalling £70 million) to 80,000 customers across the UK.
The forecast return on investment is eight per cent. The target raise is £500,000 and the minimum investment is £350.
Ethex also has bond offer available in the Brighton & Hove Energy Services Co-operative, a not-for-profit social enterprise dedicated to accelerating the clean energy transition.
The new raise – with a target of £450,000 – will save UK schools £3.1 million on energy bills by generating their own clean energy, that’s cheaper than they would otherwise pay. It will also fund a new collection of carbon-reducing solar power projects.
The forecast return on investment is five per cent. Minimum investment is £1,000.
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 up to nine per cent per year while also making a positive social impact. The minimum initial investment is £1,000.
Sustainable investment platform Abundance is offering a five-year investment to help Hammersmith & Fulham Council reach net zero through climate action projects. This first raise — of up to £1 million — will help the council fund measures to green parks and open spaces, improve and expand their sustainable drainage networks, and support residents in making healthier travel choices by installing new bike hangars and mobility hubs.
The investment is targeting returns of 4.85 per cent per year. Minimum investment is just £5.
Risk warning: Don’t invest unless you are prepared to lose money. These are high-risk investments. You may not be able to access your money easily and are unlikely to be protected if something goes wrong.