Social Finance

Social finance is defined as "an approach to managing money that delivers a social and/or environmental dividend and an economic return." It includes social investing, microlending, and sustainable business and social enterprise lending, as well as philanthropic grantmaking and program-related investments also fall under the umbrella of social finance. Social finance aims to leverage existing capital to attract new investment for public benefit. These approaches to investment and funding share the focus of stimulating positive social and environmental returns for investors and the larger world.

The main types of social investment are:

  • Secured loan - Using tangible assets as collateral, this is low risk. However, it is only an option if you have an asset or are looking to purchase an asset.
  • Bridging loan - Similiar to an overdraf but only available for a certain period and does not revolve, It is useful as a safety net in managing cash flow situations.
  • Philantrophic capital - Although traditionally a donation, this investment by trust foundations and philanthropists is increasingly expecting return. It is offered used as leverage and investors often prefer innovative ideas.
  • Equilty investment - This is currently not common as it depends on an organisation's legal status. However, it is a growth area where shares of a organisation, not limited by guarantee, are used to finance its activity.
  • Charitable bond - Part of an emerging market, this is a bond issued by a charity or social enterprise as part of a long-term debt to expand business operations.

The East Midlands Funding Advisors (EMFAN) has produced below a list of useful organisations, working in the field of social finance, who you may wish to contact for further information and advice on the subject.

Organisation Website Details
Charity Bank Charity Bank finances social enterprises, charities and community organisations, with the support of depositors and investors who want to use their money to facilitate real social change.
The Social Enterprise Loan Fund (TSELF) They provide loans to charities and social enterprises that are unable to secure sufficient funding from mainstream sources. They aim to help organisations that have a social impact, especially those working in disadvantaged communities.
Social Investment Business Helps civil society organisations prosper through better access to finance, support and long-term strategic thinking.
Social Finance Social Finance provides a range of financial advisory services to help build the social investment market.
CAF Venturesome Provides loans to charities, social enterprises and community groups when grants may not be available and access to traditional financial institutions is difficult.
Unity Trust Bank A specialist bank for voluntary and community groups, social enterprises, councils, trade unions and small businesses.
Buzbnk Buzzbnk is an online marketplace that connects social ventures from all walks of life with backers, supporters and fans.