Social investment is the use of repayable finance to help an organisation achieve a social purpose.
What is Social Investment?
Charities and social enterprises can use repayable finance to help them increase their impact on society, for example by growing their business, providing working capital for contract delivery, or buying assets.
Social investment is repayable, often with interest. Charities and social enterprises may generate a surplus through trading activities, contracts for delivering public services, grants and donations, or a combination of some or all of these. This surplus is then used to repay investors.
Social investment is not suitable for everyone, and it should be considered alongside other options. It’s important to look at the range of finance options available to your charity or social enterprise before deciding.
It is important to note that investment is not a grant or a donation.
Sources of Social Investment
Obtaining a loan from a social investor is potentially the quickest way of securing finance. There are a wide range of social banks; those listed below provide an illustrative example of the types of loans that are typically available.
Big Issue Invest
Big Issue Invest have the Big Issue Invest Social Enterprise Investment Fund II2 (SEIF II), with funds of just over £21 million. This makes loans to social enterprises of between £50k and £3m.
Charity Bank lend to charities, social enterprises and other organisations whose activities are compatible with the Bank’s values and social purpose. What matters is a commitment to a social purpose and the ability to repay a loan. The Bank makes loans from £50,000 to £2.5 million.
Co-Operative and Community Finance
Co-operative and Community Finance typically make loans to organisations owned and democratically controlled by their members who are usually employees, customers or members of a community. Loans from £10,000 to £75,000 are readily available, and they are able to lend up to £150,000 using other funds.
Social and Sustainable Capital
Social and Sustainable Capital operate a Third Sector Loan fund and a Community Investment Fund5. The Community Investment Fund invests between £250,000 and £2 million in community based, locally led organisations, which provide essential support and services to improve the well-being of local residents, developing the local economy and creating positive social change for all individuals in the community. The Fund aims to improve the quality of life of local individuals, particularly those who are vulnerable and disadvantaged, and to enhance community engagement and cohesion by empowering people to develop locally determined solutions to challenges and opportunities.