Social investment explained
Social Investment - finance provided for voluntary, community and social enterprise organisations (VCSEs) which investors expect to get back and to create social impact.
The goal of Big Potential is to raise awareness of social investment among VCSEs and help get in a position where they feel confident enough to take on social investment for themselves.
Why is social investment important?
- It recycles the money we have: there is simply less money available, and there is bigger demand for the grants that are still available from government, donations or charitable trusts. Because social investment returns to the investor, it can be used again to support more charities and social enterprises; and help ensure grants go to where they are needed most.
- It attracts new money: social investment can also help to address the decreasing resources available by attracting money from new sources: from individuals, mainstream finance, or the private sector. This can help add to the existing money that is available.
- More organisations can use it: more VCSE organisations are trading, and trading means that income is being earned and there is the potential for money to be invested and paid back. Social investment can play a role in supporting the growth of new organisations, and in helping existing charities and social enterprises to keep going and do more good.
What types of social investment are out there?
There are various types of investment VCSEs can choose to take, some more appropriate for certain organisations than others.
- Secured loans
- Unsecured loans
- Charity bonds
- Crowdfunded loans
- Social impact bonds
Good Finance is a handy website which provides information on the different kinds of funding available to VCSEs. It's a great first-stop for any charity or social enterprise that is new to social finance and wants to get to grips with the basics.