"Social finance is a category of financial services which aims to leverage private capital to address challenges in areas of social and environmental need."
An exploration of different social finance and funding models, including crowdfunding, philanthropic grants, impact investing, and social impact bonds.
Social finance: This refers to the use of financial instruments and strategies to achieve social impact, as well as financial returns. It includes financing models such as impact investing, crowdfunding, and social impact bonds.
Social enterprise: This is a business model that prioritizes social or environmental impact, rather than profit as the primary goal. Social enterprises often reinvest profits into their mission or community, and may have a social or environmental purpose as their driving force.
Impact measurement: This involves assessing the social and environmental impact of an organization or project. It can include a wide range of metrics, from environmental sustainability to community engagement.
Nonprofit finance: This refers to the unique financial challenges faced by nonprofit organizations. Topics may include budgeting, fundraising, grant writing, and financial management.
Corporate social responsibility (CSR): This involves a company's commitment to social and environmental responsibility. It can include initiatives such as philanthropy, sustainability efforts, and ethical business practices.
Public-private partnerships (PPP): These are collaborations between government and the private sector to achieve social impact. PPPs can take many forms, including joint ventures, contracts, and consortiums.
Social innovation: This involves using creative and new approaches to social and environmental problems. It can include grassroots movements, technological innovation, and policy changes.
Crowdfunding: This is a funding model in which individuals or organizations can invest in a project or company through an online platform. Crowdfunding can be particularly useful for social enterprises or projects with a strong social mission.
Social impact bonds: These are financial instruments that provide upfront capital for social interventions. Investors receive a return on their investment if the intervention achieves certain pre-determined outcomes.
Philanthropy: This refers to the practice of giving time, money, or resources to social causes. Philanthropic efforts can include donations to charities, volunteering, and foundation grants.
Social investment tax relief (SITR): This is a tax relief program designed to encourage investment in social enterprises. Investors can receive tax relief on the amount they invest in certain social enterprises.
Community development financial institutions (CDFIs): These are financial institutions that specialize in serving underserved communities, typically through loans or other financial products.
Social accounting: This involves measuring and reporting an organization's social and environmental impact, as well as financial performance. Social accounting can be a useful tool for transparency and accountability.
Crowdfunding: This is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the internet.
Impact Investment: This is an investment strategy that seeks to generate a positive social or environmental impact along with a financial return.
Social Venture Capital: This is an investment in a business with the intention of achieving social or environmental goals along with financial returns.
Microfinance: This is a type of banking service that provides small loans to people who do not have access to traditional banking services.
Community Development Finance: This is a type of finance that supports the growth and development of communities, particularly those that are underserved or disadvantaged.
Socially Responsible Investing: This is a form of investing that considers the social and environmental impact of the companies in which you invest.
Peer-to-Peer Lending: This is a type of lending that connects borrowers directly with investors, bypassing traditional banks.
Social Impact Bonds: This is a type of financial instrument that provides funding for social programs with the promise of a financial return if the program achieves its goals.
Social Innovation Funds: These are funds that provide financing for startups and early-stage ventures that are working on social or environmental challenges.
Donor-Advised Funds: These are charitable giving vehicles that allow donors to make a charitable contribution, receive a tax deduction, and recommend grants from the fund over time.
"Having gained popularity in the aftermath of the 2008 Global Financial Crisis."
"Social finance is conceptually unique as an approach to solving social problems while simultaneously creating economic value."
"Social finance secures its own sustainability by being profitable for investors."
"Capital providers lend to social enterprises."
"Deliver investors measurable social returns in addition to traditional financial returns on their investment."
"Notable examples of social finance instruments are Social Impact Bonds and Social Impact Funds."
"Shifts in investor sentiment has led to greater demand for ethically responsible investment alternatives by retail investors."
"Deutsche Bank which, in 2011, became the first commercial bank to raise a social investment fund."
"The struggle to produce desirable returns for investors, high start-up and regulatory costs, neglect from mainstream banks, and lacking access to retail investors."
"New research in the field calls for increasing the role of government in social finance to help overcome the challenges which the industry currently faces."
"Unlike philanthropy, which has a similar mission-motive, social finance secures its own sustainability by being profitable for investors."
"Investors include charitable foundations, retail investors, and institutional investors."
"Consensus has yet to be established on a formal definition of social finance due to lacking clarity around its scope and intent, however, it is said to include elements of impact investing, socially responsible investing, and social enterprise lending."
"Shifts in investor sentiment has led to greater demand for ethically responsible investment alternatives by retail investors."
"Social enterprises, by investing borrowed funds in socially beneficial initiatives, deliver investors measurable social returns in addition to traditional financial returns on their investment."
"The entry of mainstream banks into the market has provided new sources of capital."
"Social finance secures its own sustainability by being profitable for investors."
"Until these gaps are addressed, mass participation in social finance will be prevented."
"The struggle to produce desirable returns for investors, high start-up and regulatory costs, neglect from mainstream banks, and lacking access to retail investors."