Causeway/Ashoka Blog Series Topic One: What is Social Finance?
One definition of social finance is the sustainable approach to managing money that delivers social and/or environmental dividends and economic return through social enterprises operating in the non-profit or public benefit universe.
From the perspective of organizations operating within the nonprofit or public benefit realm, social finance is an approach to scale their earned revenue opportunities in an attempt to create a more resilient funding model. From the perspective of an investor, a social finance approach blends the social, environmental and financial objectives together to create a more holistic evaluation of the outcome or return on the investment. This approach creates a shift from relying solely on traditional financing for nonprofits and social enterprise, such as philanthropic grants and government funding, to capital financing options that best fit their needs, realities and structures.
Why social finance matters?
With growing government cutbacks and a decreasing unearned income proportion of funding for the sector, trends indicate that nonprofits and public benefit enterprises in Canada will continue to deal with major funding challenges. This will require an innovative approach to mobilize and access additional capital from sources that don't exist today. This will require a social finance marketplace. A healthy marketplace in Canada will create an enabling environment where nonprofits and social enterprises can focus on their mission and increase their impact.
We've asked our featured contributors for Topic 1: What is social finance?, to shed some light on the following questions:
1. By attempting to build revenue generating activities or business opportunities, does the concept of social finance take nonprofits away from their mission?
2. Does social finance capital compete with grant funding that nonprofits (that don't have earned revenue capabilities) rely on?
3. What does a sustainable or innovative finance model look like?
Now we turn it over to you - you don't have to be an expert to weigh in on this conversation. Do have comments about social finance? Do you agree or disagree with the comments of our featured bloggers? Do you have something else to add? Let us know!
