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 four investments for a green IFISA:
Ethical loans – Ethex
Ethex has a share offer with Salad Money, an award-winning ethical alternative to high-cost credit loans, providing people excluded by mainstream finance with appropriate, fair and affordable credit.
All funds raised will go towards new lending, facilitating over £60 million of affordable loans over five years for people hampered by poor credit scores. This means more people will be able to access fair and affordable finance, helping them avoid high-interest and unethical lenders. Salad Money aims to change the face of consumer credit by pressing for regulation and supplying an alternative to high-cost lending.
The target raise is £400,000 and minimum investment is £100. The target return is nine per cent, dependent on Salad Money’s performance.
Renewable energy/ fuel poverty – Ethex
Ethex has a bond offer with Energise Barnsley, a local authority and community energy rooftop solar and battery storage project in the UK.
The target raise is £3,175,000 and minimum investment is £500. The target return is six per cent, dependent on Energise Barnsley’s performance.
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 up to nine per cent per year while also making a positive social impact. The minimum initial investment is £1,000.
Net zero councils – Abundance Investment
Sustainable investment platform Abundance is offering a five-year investment in Southwark Council to help fund green and nature upgrades across the borough. Southwark Council has an ambitious plan for the whole borough to be carbon neutral by 2030.
The money invested will help fund climate projects such as:
- Expanding the ‘Library of Things’ (where you can hire useful household items) to new parts of the borough, which will help reduce waste and save residents money
- Key nature projects to protect and improve Southwark’s green spaces for plants and wildlife
- Green drainage projects like rain gardens that will tackle flooding
- A major green upgrade to Camberwell Cemeteries and Crematorium
The target raise is £6 million with a forecast return of 4 per cent per year, dependent on the council’s performance. Minimum investment is just £5.
Other options:
Triodos Bank – a Good With Money Good Egg company – regularly offers investments that are eligible for an IFSA. Check their website for upcoming opportunities.
Risk warning: Don’t invest unless you are prepared to lose money. These are considered high-risk investments. You may not be able to access your money easily and are unlikely to be protected if something goes wrong.
