One of the first UK fund to offer tax incentives for social enterprise has amassed three fifths of its targeted amount, less than two months after it opened to investors.

Social Investment Scotland, launched the SIS Community Capital pilot fund in May, to allow investors interested in promoting socially-beneficial investment to spread the risk.

SIS Community Capital has an “upside target” of raising £500,000 and has already received over £300,000 worth of investment. The fund is due to close 31 August unless the half a million pound target is reached before then.

The fund has been developed by Social Investment Scotland (SIS), one of the UK’s leading community development finance institutions (CDFI), which trades on its special understanding of the social sector and its level of investor care. The new fund allows investors to make substantial tax savings while helping to support the creation and growth of charities, community organisations and social enterprises, that benefit society and the environment.

Nick Kuenssberg, chair of Social Investment Scotland, said: “SIS Community Capital was launched in response to research which showed an unmet demand for social investment products. There are very few opportunities for investors to support a wealth of good social projects and receive tax relief. Time is running out to get involved with SIS Community Capital.”

Alastair Davis, chief executive said: It is encouraging to reach over £300,000 of investment within the opening period and we hope that interested investors will take the fund to £500,000 by end August.”

SIS Community Capital has a return rate of 1.5% for investments over six years, with interest only in the first three years, and capital repayment plus interest in years 4-6.

An illustrative £10,000 investment, less social investment tax relief of 30 per cent, or net investment of £7000, would yield a return of £10,900 at the end of the term. The sector’s bad debt record is under 5%.