Social investment is equity, quasi-equity or debt investment in a social business where the investor expects a social as well as a financial return.
Some social investors may take a governance role in the social business they invest in, but most social investment to date is typically debt financed. Social investment works the same as any debt or equity finance, with the added requirement of a social return. Investment products such as Social Impact Bonds are being developed as a novel mechanism to deliver public services.
Types of social investors
Social investors range from philanthropic angel investors to ethical banks, government sponsorship and charitable funds. They are all willing to invest their capital funds in social business against the promise of a social return. Social investors are as diligent as traditional ones when assessing the business they are putting money behind. Indeed, charitable trusts looking to invest will often take a more cautious approach to risk.
Social investment business resources
Big Society Capital drives much of the growth in social investment. An independent financial institution with a social mission, they help grow the social investment market in the UK. BSC have many useful resources for those considering social investment, including a comprehensive list of funds.
The Big Lottery’s guide to social investment is available on their website.
The Social Investment Business offers useful resources and a list of its own funds.
Social Investment Cymru is part of Wales Council for Voluntary Action (WCVA). For the past 10 years, it has supported social enterprises in Wales with a range of financial products.
Community Shares Wales helps social businesses and community groups raise share capital.