Innovative Finance ISA

Innovative Finance ISAs  (IFISAs) allows you to invest directly into innovative projects or companies that need investment to grow. 

Think of it like crowdfunding, but in an ISA wrapper.

As the investment is directly used by the company you are investing into, this form of finance can be particularly impactful.

Last Updated: January 2021

In an Innovative Finance ISA (IFISA), you invest your money to directly finance certain projects or companies (rather than into cash, or into 'secondary' markets like the stock market, which is the case for investments in a Stocks & Shares ISA).

 

As you are directly financing single entities, this means that your money is directly used by the company. You can choose innovative investments and track their progress- both financially and how much positive impact they deliver. 

However, these investments are often smaller scale than companies on the stock market, and as you are investing into single entities rather than a basket of companies (which is the case when you invest into a fund), there is more risk involved as you are relying on the financial performance of just that entity. You may want to consult with a financial professional with this type of investment.

There are only a few providers of IFISAs that target ethical investments. The nature of IFISAs means that on each platform, only a few companies or projects are available to invest in at any one time. Below we outline the best ethical IFISAs that are on offer:

Triodos

A Dutch bank which lends only to organisations that have a positive social or environmental impact

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Minimum investment: Typically £50

Fee: No platform fee

Typical number of projects open for investment: 1- 2

Focus: Environmental and social projects in the UK

To date, Triodos has raised over £150 million through its crowdfunding platform (most investments of which are IFISA- eligible) funding more than 60 projects through its crowdfunding platform. 

Energise Africa

A European initiative financing clean energy projects in Africa

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Minimum investment: £50

Fee: No platform fee

Typical number of projects open for investment: 1- 2

Focus: Solar power in Africa

Energise Africa is a partnership between Ethex and Lendahand, which are both platforms that enable you to invest directly into impactful projects and companies. 

 

Energise Africa is different to Triodos and Abundance, in that they focus exclusively on financing solar power projects in Africa, rather than a broad range of environmental or social businesses. Energise Africa also structures its investments so that you get a return on your money every 6 months, rather than waiting for the full length of the project.

Abundance

Impact investment platform that facilitates direct equity and fixed income investments 

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Minimum investment: From £5

Fee: No platform fee

Typical number of projects open for investment: 1- 3

Focus: Green infrastructure projects in the UK

Abundance has invested over £110 million, successfully funding over 45 projects. 

 

Similar to Triodos, there are usually only one or two projects open for funding at any one time, and these investments are often illiquid and for the long term. You can, however, trade investments on Abundance’s marketplace, which can help you to diversify your investments.