Social Investment

The National Council for Voluntary Organisations website provides an excellent introduction to the issue of Social investment, which is an investment activity that has an expectation of both a social outcome and a financial return, which would usually be below market rate. For voluntary organisations, it represents a form of repayable finance that can be used for capital investment, revenue funding development, capacity building, or other ways of improving their sustainability.
Social investment can take the form of:

  • A loan, usually a secured loan
  • equity (only if the organisation is constituted with a shareholding structure)
  • Quasi-equity where the lender takes their returns as a proportion of the organisation’s
  • future revenue
  • overdraft facilities

Social impact bonds where investors put forward the capital required to run a project, and are repaid by the commissioner (usually government) based on the results – or social impact – of the delivery organisation (often a charity). Read more here

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