What is Social Investment? 

Social investment is a way of providing repayable finance to social enterprises and charities to help them achieve social impact . Unlike traditional investments that focus solely on financial returns, social investment aims to create a positive social impact alongside a financial return. This type of investment supports organisations that work to address a range of social issues for example homelessness, unemployment, and environmental sustainability  

Social investment covers a range of types of investment like  loans, equity, revenue participation and outcomes contracts. So knowing what social investment is as well as who provides it is key.

What Makes it Social? 

Social investors focus on investing in initiatives that support communities, save the  environment and help people who are underserved or marginalised. They want to invest their money, get it repaid and invest it again all whilst seeing how it can help support their lenders to create a fairer society. Traditional investors might not understand the way we do business or might consider investments to bear too much risk but sustainability , making a profit and creating change is not mutually exclusive.  Simply put they want to see how their money can make a difference. 

Going above and beyond.  This often involves collaborating closely with the organisations they fund, providing not just financial support but also guidance, mentorship, and other resources to help them succeed. In the Good Finance investor directory, over 80% of social investors are themselves charities or social enterprises, ensuring their commitment to creating impact.  
 
As highlighted by Mike Rivett-Strong at Livv Investment in our ‘meet the investor series’ “We focus on providing social investment to organisations that benefit the community and contribute to social value. This includes initiatives that address social issues, improve community wellbeing and create long-lasting impact.” 

Morag Davies from Reliance Bank echoed this, sharing “It’s not about a loan, it’s how valuable the money is to our clients to allow them to help people”. 

Social investment also enables organisations to build strong relationships with investors who offer more than just financial backing.  By leveraging their expertise and networks, social investors can play a vital role in the growth and development of social enterprises. 

How does Social Investment create change

Social investment helps create new ways to solve social and environmental problems. By distributing money to organisations focused on making a positive impact, social investors support the development of new ideas and technologies that benefit society. This funding helps social enterprises and charities become financially stable, earn flexible income, and adapt to changing needs, ensuring they can keep doing good work and make impact in the long term. 

Social investment also helps grow the economy in a more considered way and encourages businesses to act responsibly. By funding organisations that create jobs, supporting small businesses, and improving community services, social investment supports local economies. 

By focusing on real, measurable results, social investment ensures that the money spent makes a real difference, helping guide future efforts to solve social and environmental issues. 

Examples of Successful Social Investments

To illustrate the power of social investment, we have several inspiring case studies: 

1. Nemi Teas: Brewing a Better Future Nemi Teas is a London-based social enterprise dedicated to enhancing sustainability and creating job opportunities for refugees through ethically sourced tea. Their eco-friendly approach includes biodegradable tea bags and plastic-free packaging, minimising environmental impact while fostering social inclusion. 

2. Farm Urban: Growing Green Innovations Based in Liverpool, Farm Urban transforms city landscapes into sustainable ecosystems through urban farming projects. They educate communities, particularly young people, on sustainable living, promoting environmental responsibility and community engagement. 

3. POP Up Projects: Located in the East of England is an inspiring example of social innovation. They focus on community development and engagement, transforming local areas through creative projects. Social investment has been instrumental in their growth, enabling them to reach more communities. Learn about POP Projects' journey in our full case study. 

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Frequently Asked Questions

Who can be a social investor? 

• Social investors can include individuals, foundations, impact investment funds, and socially responsible businesses. Anyone committed to generating positive social change alongside financial returns can engage in social investment. 

How can organisations access social investment?

• Organisations can use tools like our Fundmapper to explore social investors and funds across the UK. Additionally, resources such as the "Is It Right For Us?" tool can help determine if social investment is suitable for their needs. 

How is social impact measured? 

• Social impact is measured using various frameworks and tools, such as the Outcomes Matrix, which helps organisations plan and track their social impact in terms of outcomes and beneficiaries. 

How long does it take to secure social investment  

• It will take longer than you think. Social investors have processes and credit committees who have the decision making power and even if these meet monthly, how quickly you are able to supply the information that is needed to complete due diligence will have an impact on timescales. 

How Much Does Social Investment Cost 

• Social investors don’t all do the same thing. And they don’t all lend the same type of money. Where social investors get their money from, denotes the amount of risk they can take. Risk is all about taking a balanced approach: some will pay more and others will pay less. You can calculate the cost with our 'cost of capital calculator'