Press release
Ethical savings bond pays up to 14% upfront interest to charity
Ethical savings bond pays up to 14% upfront interest to charity
Tax-free donation not affected by proposed tax relief cap
Allia’s latest round of Charitable Bonds is open for investment, offering investors up to 10% return on maturity or up to 14% upfront tax-free interest donated to their chosen charity.
The Charitable Bond is a 5-year fixed-return ethical savings bond that allows investors to do something good with their money at minimal risk. Investors in the bond share the interest with their chosen charity, deciding how much if it they want to receive – if any – on maturity, and how much they want to donate upfront to their charity.
Issued by Allia, a charitable investment intermediary, the Charitable Bond also allows investors to see exactly where their money goes and know that none of it is used to pay for dividends, bonuses or corporation tax. Allia obtains the interest by lending to Places for People Homes, an AA rated ‘not-for-dividend’ social housing provider, and is used to develop housing and to provide a range of services like job and training opportunities and specialist support and care to enable people to live independently in their own homes.
Allia lends the money at a fixed rate for five years, allowing it to offer investors a fixed return on maturity and to discount part of the interest and release it upfront to the investor’s chosen charity. In this current round, investors in a Charitable Bond can choose to receive up to 10% gross return on maturity, which will pay 5.8% upfront interest to charity. Alternatively, those investors who opt for zero return will see a donation of interest equivalent to 14% of their investment going straight to their charity.
That upfront donation goes directly to the charity before tax and isn’t counted as income to the investor. That means no administrative time and cost is spent on Gift Aid reclaim or self-assessment tax rebates. More importantly it means the donation won’t be affected by the government’s proposed cap on tax relief, nor will it affect the investor’s tax-relief allowance.
Henrietta Royle, who invested £10,000 in a Charitable Bond for her charity describes it as ‘a marvellous alternative way to give.’ “There may be quite a lot of people right now who don’t have significant amounts they can give” says Henrietta, “but do have some capital they are not getting much return on. They could put their savings to much more effective use in a Charitable Bond.”