Social finance

Social investment is defined as repayable finance that generates both a financial and a social return, sometimes called a blended return. It encompasses loans, equity and, less often, donations.

Social investment, like social enterprise activity, may not be for all not-for-profit organisations but if your organisation:

• has good management & governance
• is keen to grow
• has fairly predictable income streams that can support the repayment
of a loan,
• can clearly demonstrate the social outcomes of your work

then social finance may be a funding option for you.
See New Philanthropy Capital’s Best to Borrow?

Technology is also creating new ways to raise money directly from investors. Mobile phones and the internet facilitate this direct cash transaction, known as crowdsourcing or crowdfunding .
Some charities have seen the benefit of finance raised through electronic means and there has been a rise in Just Giving type websites

Who invests money this way? It ranges from investors looking for greater commercial returns than those available through more traditional investing to philanthropists wanting to see their money make a difference – as well as making a small return.

Top tip

If borrowing is an option for you and you have a sound business model, borrowing from a commercial bank will usually give the most advantageous rates.

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Contact us if social impact bonds and other social finance instruments are a mystery to you but you think they might be of value to your organisation. Contact Sue Dovey for a discussion about how we can help