Investment by CDFI: Meaning and calculation of 'investment fund' and ‘qualifying investments'
SI2003/96 Regulation 9; CTA2010/Chapter 2/S225; ITA/s344
Accreditation as a Community Development Finance Institution (CDFI) is conditional on the accredited body investing specified proportions of its ‘investment fund’ within defined time limits (see CITM3005).
Broadly speaking, the amount of the investment fund at any given date (the ‘relevant date’) is
- the amount that the CDFI has raised through the CITR scheme (‘qualifying investments’)
- adjustments that take account of certain amounts that are no longer available to invest.
The amount of the investment fund at a given date is defined by the formula
Investment fund = A - (B+C)
A = the amount of:
- ‘qualifying investments’ (as defined at CTA2010/Chapter 2/S225 & ITA/s344 (see CITM4005)), and
investments by other CDFIs in the CDFI, which have been
- held continuously from the time they were made until the relevant date (i.e. investments that were qualifying investments but which prior to the relevant date are withdrawn are disregarded).
But note that for the purposes of calculating the amount of the investment fund at the relevant date any qualifying investment made during the three months preceding that date is disregarded.
Where the investment is a loan under which the CDFI can draw down amounts over a period of time the amount of the qualifying investment is the amount drawn down at the relevant date.
B = amounts originally raised through the CITR scheme but which at the relevant date have been repaid, redeemed or bought-back by the CDFI, or which are due to be repaid, redeemed or bought-back within the three months following the given date.
C = amounts of investments made by the CDFI from the investment fund that have been written-off in accordance with generally accepted accounting practice.
‘Generally accepted accounting practice’ is a term that encompasses broad guidelines, and detailed practices and procedures. Brought within it are all of the Statements of Standard Accounting Practices, Financial Reporting Standards and also (if applicable) the requirements of the Companies Acts and the Stock Exchange.