Social investment - Is it for me?
What is social investment?
Social investment is the use of repayable finance (i.e. not grants or donations) to deliver positive social impact as well as return on financial investment.
Charities and social enterprises use social investment funding to help them increase their impact, for example by:
- developing new or existing activities that generate income
- providing cashflow funding to help deliver contracts where payment will follow later
- buying assets
Types of social investment
Borrowing (debt)
“Taking out a loan which you agree to repay over a set period of time. Most debt investments are paid back with interest - a fee you pay to the investor for the use of their money.”
Shares (equity)
“Selling shares in your organisation to an investor. Equity investors receive a share of any profits paid out by the organisation and get to have a say in how the organisation is run.”
Who provides social investment?
Organisations, such as:
- specialist social investment firms
- social banks
Each organisation has different eligibility criteria. It's important to understand how social investment works and be confident that it is right for your organisation before contacting providers.
Click this link to find providers of social investment.
Direct from an individual or group of individuals
This includes:
- Angel investment – a type of private equity investing in which high net worth investors attempt to earn higher returns by taking on more risk. Social investment focused angels can be found through ClearlySo, via this link
- Crowdfunding - peer-to-peer lending and crowdfunding platforms such as Crowdfunder, Ethex and Community Chest.
- Community shares - withdrawable shares that cannot be sold, traded or transferred between members. This form of investment is only available within certain legal structures.
- Social Investment Tax Relief – this can often be used as an additional tool to angel investment, crowdfunding and community shares.
To find out more about how you can ready your organisation for investment opportunities, check out our Connect Fund Peer Networks Programme running in 2023-24 via this link!