Our regular series of posts demystifying the sector continues as we cast our eye on “Social Investment”. With these we aim to explain the jargon as simply and clearly as possible.
Social Investment has been one of the buzzwords within the social good sector for the last ten years. It’s been seen as a new source of capital for the not-for-profit sector, one with huge potential to inject significant funds to those working to positively change the world.
It’s also been touted as a great way for those driven by social good to have a positive impact, not as a philanthropist, but as an investor.
As with many terms within the sector, it’s morphed into something larger, and been diluted along the way. However, at its core, it’s a very simple concept:
Different types of social investment have developed over the years offering investors who want to achieve a social, as well as financial return, a range of options.
The following kinds of social investment might be of interest to the individual driven to use their funds for social good.
The financial tools offered to charities who often need to turn to specialist providers are also often described as “social investment”.
These could include providing loan facilities (pre-grant, bridging, working capital, secured, unsecured, etc…) or underwriting facilities to charities who are often turned away from traditional forms of finance.
Philanthropists/Investors are able to support the delivery of this, through what we describe as “recycled grants”. By using a specialist provider such as SharedImpact or CAF Venturesome, charitable funds can be transformed into loans which, once repaid, can be leant out again and again to achieve multiple impacts.
Another strand of this is in the use of capital to deliver social investment to charities. Savings held in organisations such as Charity Bank or Triodos Bank enable them to lend funds to charities and social enterprises.
There is often some confusion between social investment and the below.