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, 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 £600,000 and minimum investment is £50. The target return is nine per cent, dependent on Salad Money’s performance.
Community Benefit – Ethex
Ethex has a community shares offer with Otley Common, to turn an old civic building into a community-led, climate-positive, cultural hub in the heart of the vibrant town of Otley, Leeds.
The target raise is £312.205 and minimum investment is £200. The target return is 6.25 per cent, dependent on Otley Common’s performance.
Affordable clean energy – Energise Africa
Energise Africa has a bond offer with clean energy company OnePower.
Investments in this bond offer will enable the construction of two Green Mini Grids (GMGs) in two villages in Benin, West Africa – Kotokpa and Aglamidjodji – providing life-changing clean, reliable electricity to 1,100 households and small businesses in these rural off-grid communities. The bond will help 6,300 people in Benin to access clean, reliable and affordable solar power, improving living standards and economic progression for the villagers.
The target raise is £305,000 and minimum investment £50. The target return is eight per cent, dependent on OnePower’s performance.
Nature-led business – Triodos
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 four new investments, opening on June 2, in councils across London.
The money raised will help these councils transform their communities into greener, healthier places.
Other options:
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.
