Social Investment is about investing for both a social and financial outcome, however this would usually be below the market rate.
Social Investment emerged after changes to the voluntary sector in the way in which it was funded, mainly due to drastic cuts in grant funding. This investment can happen in many ways including;
- A loan, usually a secured loan
- equity (only if the organisation is constituted with a share-holding 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).
This investment can be used to help projects to grow which may include housing stock purchase and development or developing employment skills.