Why seek social investment?
You may have heard a lot of buzz around the term “social investment”, but be unsure exactly what it is and if it would be right for your organisation.
Social investments can help you achieve your goals in a wide variety of ways, but crudely, are for three main purposes:
- Getting money to fund something now, rather than wait until after you have fund-raised. (Perhaps you need to finance the purchase of a property, or you wish to enter into a contract that only pays in arrears.)
- Getting money to fund a new type of service – perhaps you are a start-up and need early-stage capital, or a more mature enterprise wanting to embark on a new product or business line.
- Transferring financial risk from your organisation to someone else. (Perhaps you wish to share the financial risks associated with expenses in a foreign currency, or the uncertainty of your revenue stream.)
Common forms of social investment for social enterprise:
- Straightforward loans
- Loan facilities – ones that are available on request, like an overdraft
- Mortgages or other financing for property
- Shares, or (where your legal structure doesn’t allow for shares), quasi-equity