Social Investment Manual
A Guide for Social Entrepreneurs
Developed by Social Investment Task Force
Technical University Munich
Schwab Foundation Community of Social Entrepreneurs* led by Andreas Heinecke
Schwab Foundation for Social Entrepreneurship
Ann-Kristin Achleitner Wolfgang Spiess-Knafl
Mirjam Schöning Abigail Noble
18 May 2011 * Please see page 50 for an overview of the task force members of the Schwab Community which contributed to the development of this document. We look forward to your comments or suggestions. Please contact firstname.lastname@example.org and email@example.com We would like to thank Miriam Al-Ali, Andrea Coleman, Gene Falk, Pradeep Jethi, Victoria Kisyombe, Lisa Müller, Reed Paget, Amitabha Sadangi, Sarah Volk, Heinrich Weninger, Arthur Wood (in alphabetic order) and all participants of the workshop on “Social Investment” organized by the Schwab Foundation for their contributions and their willingness to discuss some of the key issues.
Table of Contents
Foreword 1 2 3 Introduction Social Investment Landscape The Financing Process 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 5 6 7 Index Sources Available Financing Instruments Finding the Right Investor Approaching the Social Investor Screening and Due Diligence Process Negotiating the Financing Terms Working with Investors Performance Measurement Exit Consideration Social Capital Markets Internal and External Financing Financing Instruments Reporting Template Investment Template Social Investors with General Investment Focus Social Investors with Focus on Microfinance Value Banks Social Investment Advisory Funding Consultancies Social Stock Exchanges 3 5 6 7 7 9 10 11 13 15 16 18 19 19 21 22 24 25 27 37 40 46 48 49 50 52 53
Task Force Members
The basis for this manual was laid at a social entrepreneurs gathering during the World Economic Forum’s Annual Meeting of New Champions in Tianjin (China) in September 2010. Thirty social entrepreneurs in the Schwab Foundation community came together from all continents to share their current challenges and deliberate how these challenges could be addressed by pooling their shared experiences and leveraging the Foundation’s networks. Subsequently, several task forces were formed to address these common challenges. The task force on social investment quickly caught the interest of further members within the Schwab Foundation community, which comprises 200 of the world’s most advanced social entrepreneurs. The Schwab Foundation recognizes that social enterprises span the spectrum of grant based to financially self-sustainable to profitable. The social enterprises in the Schwab community are classified by one of three business models (leveraged non-profits, hybrid non-profits and social businesses). The majority of Schwab social entrepreneurs (70%) either has a hybrid or a social business model and could therefore benefit from different debt and equity structures to expand their impact. Most of the entrepreneurs participating in the social investment task force had collected experience with social investors. They have gone through long negotiations and learning processes to access debt or equity capital for their organizations. While networks like the Global Impact Investing Network (GIIN), the Aspen Network of Development Entrepreneurs (ANDE) and the European Venture Philanthropy Association (EVPA) provide opportunities for the social investors to exchange experiences, few, if any investees had exchanged notes with fellow social entrepreneurs. The task force therefore set out to assist fellow social entrepreneurs on the path into the social investment space with this manual. The decision to engage with social investors, as is any decision by the founders to share responsibility and ownership of their daily operations and results of their organization with external stakeholders, is one that must be well researched and the implications carefully considered. We hope that this manual provides the basic toolkit for social entrepreneurs to begin these conversations, not only with prospective investors, but also with themselves. Social investment can offer entrepreneurs the chance to scale up and out their impact exponentially, but it can also lead to unintended consequences, such as a change in strategic direction, a divergence from the original values and mission, or a loss of control over the organizational culture and direct engagement with the community it is serving. Given this, the need for a manual is ever more important for social entrepreneurs. It is our hope that the Schwab Community of Social Entrepreneurs will embrace both the challenges and opportunities represented by the social investment space, and will use as a launching point this guide and the work of this taskforce. With this, we can deepen our understanding and widen our use of the practices and metrics of social investment. Given the rapid evolution of this field, the task force welcomes continuous feedback and insights from entrepreneurs to incorporate in the guidebook.
We would like to recognize and thank Andreas Heinecke for driving the task force on social investment as well as the members of the task force. We would like to thank Prof. AnnKristin Achleitner and Wolfgang Spiess-Knafl at the Technical University Munich for their invaluable support in putting this manual together.
Mirjam Schöning Head Schwab Foundation for Social Entrepreneurship
Abigail Noble Regional Head for Latin America and Africa Schwab Foundation for Social Entrepreneurship
Paradoxically. As the field of social enterprise has gained credibility and therefore scale. it is not a simple market inefficiency or matching problem that must be solved. rigorous and mutually agreed upon metrics that will facilitate the social investment transactions and deal flow are imperative. as this form of financing is often called. Social Investment. if not the only source of funds for a growing social enterprise. to help shorten times to assess expectations and prepare a mutually relevant frame. to help them engage better with those who deal with social investment support. and often. The goal of this manual is to alleviate an additional challenge on the hands of the social entrepreneurs. The best of intentions on both sides cannot prevent deals from failing. a lack of regular cash flow. that of having a mutually compatible approach for social entrepreneurs and social investors. This manual strives to address this challenge. However. and investors in this sector often lack on-ground knowledge. The duration of expression of interest until the conclusion of an investment agreement is inordinately long. investors seeking to make both a financial and social return often feel the options are limited. This document is by no means a scientific treatise on social investment.
. represents a real alternative to government subsidies or donations. It is written from the perspective of social entrepreneurs. better understanding of the social investment space is needed on both ends. nor is it an abstract idea. funding sources that can ensure not only the financial sustainability but also the growth in impact of social enterprises have deepened and widened. sometimes running in years. Second. while successful social entrepreneurs with proven track records face a chronic lack of capital. The authors of this manual believe the problem is one of information and understanding. Social investments present a business practical approach to investing in organizations and projects that brings about change in areas that may not be considered “commercially” attractive. Two completely different worlds collide — one where planning and structure is all-important and one where there is apparently a lack of management expertise. philanthropic donations were the major. vague and uncertain planning perspectives. Most often this is because the skills and expertise required to achieve the objective are not understood.1 Introduction
Traditionally. First. Social entrepreneurs complain that there is little understanding of the definition of “social impact” and there is often financial over-engineering. Social entrepreneurs have already sought out to address the most pressing problems facing societies today.
Value banks provide loans to social enterprises with a low risk profile to minimize the default rate as they have to secure the deposits of its savers. In addition to the financing institutions. The institutions known in the traditional capital markets have been transferred to the social sector to reduce the transaction costs and to help allocate capital more efficiently.
Figure 1 Social Capital Markets
Source: Achleitner & Spiess-Knafl (in press) Knafl Each institution focuses on a specific segment of the social sector. Please see appendix on page 19 for an see overview. source mature social enterprises with a proven business model and significant capital needs while venture philanthropy funds provide capital for younger and innovative enterprises.2 Social Investment Landscape
Over the last years there have been increased efforts to facilitate the financ financing for social enterprises and to overcome the challenges of the traditional philanthropy model based on donations. Social stock exchanges could be an attractive funding sourc for . there are also institutions whic advise social which enterprises and funders how to structure an investment.
. The institutions in the social sector and their equivalent in the traditional capital markets are shown in the following figure.
1 Available Financing Instruments ble
The first step in finding the right financing structure is the choice of the right financing instrument. When determining the right financing instrument.g. Those financing instruments are described in the following table as well as in more detail in chapter 4. 5% interest)? s interest) Classification of available financing instruments
Illustration based on Achleitner Spiess-Knafl & Volk (2011) Achleitner. would you be able to take on capital that requires annual interest or dividend payments (e.
3. social entrepreneurs have to ask the following questions also shown in the f figure below: Would you be able to set aside capital that would allow you to repay any financing you might receive after a couple of years? In thinking about ways that your organization might grow. 7
.3 The Financing Process
The complete financing process includes the following steps: ing Finding the appropriate financing instrument Finding the right social investor Approaching the social investor Screening and due diligence p process Negotiating the financing t terms Working with the investor including performance measurement Exit of the investment
Before approaching a social investor the social entrepreneur should consider first which financing instruments are suitable and which social investor supports his strategy and social mission.3.
Term Sheet Duration: Short term
Implications for Social Enterprise .Usually restricted use for predefined projects .High fundraising costs .Low entrepreneurial flexibility Annual interest payments require predictable cash flows No dilution of ownership Far-reaching rights of capital providers in case of default High entrepreneurial flexibility in the use of capital Dilution of ownership Social investor receives control and voting rights Profit participation for social investor Potential impact on corporate culture Annual interest payment require predictable cash flows No dilution of ownership Mandatory repayment Profit participation for social investor Inexpensive financing instrument No dilution of ownership Risk sharing with the social investor Great structuring flexibility
Annual Payments: None Repayment: Duration: None Long term (3-7 years)
Annual Payments: Interest payments (variable) Repayment: Duration: Yes Unlimited
Annual Payments: Dividend payments (variable) Repayment: Duration: No Long term (3-7 years)
Annual Payments: Interest payments (variable) Repayment: Duration: Yes Long term (3-7 years)
Annual Payments: None Repayment: Depends upon structure
Table 1: Comparison of Financing Instruments Source: Own illustration 8
2 Finding the Right Inv Investor
The second key element in determing the right financing mix is the financing source.
.3. The first meeting with the social investor or a discussion with other investees are good ways to answer this question. The social entrepreneur also has to consider if the social investor shares the same values and has a similar mission. This “proof of concept” is usually not oncept negotiable. In the case of significant capital needs exceeding a limit of ~$1. The geographic focus and the sector focus are therefore usually hard criteria. Figure 3 Investment fit
Source: Own illustration Most social investors concentrate their funding to gain experience and to transfer knowledge between the social enterprises. However. The questions to ask in finding the right investor are shown in the following figure. the financing terms and the investment stage do offer room for negotiation.000. For this reason a social investor might only invest in youth projects in Western Europe.000 social investors can syndicate the investment (simultaneous investment of two or more investors). The different investment stages are: Seed Early Stage / Start-Up Later Stage / Mature
A social investor might only finance a proven business model while others finan individuals finance with a promising concept for a social enterprise.
Tell us about your team. the dialogue with investees of the social investor or the dialogue with social investment advisors which do have a good overview of the activities of the different social investors.org addressing the following topics: . This template structures the relevant information and reduces the time spent for further inquiries.
Also see page 45 for a list of social investment advisors. On this page Acumen Fund describes the formal criteria such as: .Many well-intentioned ideas to help the poor are not sustainable and do not appropriately address market barriers to success. Box 01 Acumen Fund has a link on its website “Business Plan Submission” with all relevant information. those funds have low contact barriers and offer information on their website how to contact the fund managers.Stage If the social entrepreneur meets these criteria he is asked to send his business plan to businessplans@acumenfund. How has your venture uniquely addressed these issues? What is unique about your approach to the challenges of serving the poor with your product or service?
Another more personal possibility is the visit of social investment conferences.3 Approaching the Social Investor
Social investors are usually interested in screening and analyzing as many social investment opportunities as possible. mission.Tell us about your experience and knowledge working with the market that you'd like to serve.Geography .How is the product or service relevant to impacting the lives of the base of the pyramid? .
.Sector .Size .What is the primary product or service you provide? . What have your experiences been in testing your product in the target market and how has this positioned you to grow from here? .1 In the appendix on page 25 there is an investment template on how to prepare the relevant information.3. Therefore. How are you uniquely qualified and positioned to take on this endeavor? . and goals.
Relevant questions could include aspects such as access to the target group. Within the criterion “Market” venture philanthropy funds discuss the competition and peers of the social enterprise and certain characteristics of the target group. fund managers want to understand the potential market size to better evaluate growth strategies. professional skills. stakeholder support or innovation. they want to understand how and how much income will be generated during the holding period. The factors can be generally divided into five groups which are strategic skills.4 Screening and Due Diligence Process
Social investors usually analyze a few hundred social enterprises per year and use a multistage selection process. creativity. According to Heister (2010) they can be grouped in the following categories: Concept Market Financials Social Impact Social Entrepreneur
“Concept” accounts for a large part of the discussions in the investment committees and is the single most important selection criterion. creativity and biography. Within the selection criterion “Social Impact” fund managers analyze the scalability and reach of the business model. Investors want to understand whether the product or service provided will change the relevant sector and help the target group. Within this selection process.
. Additionally. fund managers discuss around 50 different selection criteria. The selection criterion “Financials” is highly relevant for funds which do expect interest payments and a repayment after a few years. attitude and development potential. Fund managers regularly discuss different aspects within the group “Social Entrepreneur”. empowerment strategies. Basically. The most discussed criteria are dedication. A sample of questions to prepare is shown in the following box.3. Reach is the percentage of the market reached with the concept whereas scalability refers to certain characteristics of the business model such as the necessary know-how for service provision and the dependence upon certain stakeholders which could influence the scaling of the social enterprise. Fund managers analyze the business model as well as capital requirements.
17. 8. 20. 19. 3. 11. 13. 4.g. 18. 16. special abilities of autists)? Does the concept integrate the target group in the process of the service provision? Are other stakeholders integrated in the concept (e. teachers or neighbors)? Does the concept use externals and multipliers for the service provision? Can the target group easily access the offer (low-threshold offer)? Does the concept aim to change the system? Can the concept be copied and scaled easily? What is the potential reach of the concept? Is the offer dependent on the skills. Is it a new concept? Are there existing or competing offers for the target group? What is the difference to the other concepts and offers? Does the organization have a clear strategy to solve the social problem? Can the target group be defined and does it have an incentive to accept the offer? Does the concept focuses on the strengths of the target group (e. 12. 6. 10. 7. parents.Box 02 For the due diligence process social entrepreneurs should prepare the following 20 questions: 1. 9. experience and contacts of the founder? What were the motives of the foundation? Is the founder resilient? Has the founder good communication skills? Has the founder already gained entrepreneurial experience? Is the founder able to delegate duties? Is the founder creative in solving problems?
. 2.g. 5. 15. 14.
Considerations regarding the exit are discussed in more detail on page 18. In case of nominal values the repayment should also be based on nominal values. The financial return can be realized through an increase of the value of the social enterprise as well as through dividend payments. Another option is the complete refinancing at the end of the loan period.g.
Debt capital (loan)
A loan is attractive if the social enterprise has access to stable and predictable cash flows. Moreover. about 7% in Western Europe) and depends upon the financial return expectations of the social investor.2 Another issue is the question what kind of financial return the social investor can expect.000 after setting up a second location). The financing terms include: Interest rate Repayment schedule Financial flexibility Default scenarios
The interest rate is the annual payment of the social entrepreneur to the social investor. the social entrepreneur also needs to repay the loan. In a popular model the social entrepreneur starts to repay the loan (the principal) after two years.g.
In one example the social investor has taken up 10% of the social enterprise at nominal value and also provided a loan. The financing terms differ between debt capital (loan) and equity capital. An essential point is the question if the transaction is based on nominal or market values. the social investor and the social entrepreneur start the negotiations of the financing terms.
An equity investment gives the social investor a share of the company and the future profits. In such cases it is important that the social entrepreneur can buy back the 10% of the equity at nominal value. Besides interest payments.000 at the start and $250.5 Negotiating the Financing Terms
If the due diligence is finished positively.3. the social entrepreneur has to address the question of control and voting rights. $250. The investor should be able to influence decisions in the company but the social entrepreneur should be careful in giving too extensive rights to the social investors. In some cases the social investor provides the financing in separate tranches after the reach of certain milestones (e. The interest rate ranges from 0% (interest-free loan) to market rate returns (e. In the case of an equity investment the social entrepreneur has to negotiate the following terms: Valuation of the social enterprise Dividend payments Exit / repayment
A social investor would take up between 10-25% of the company and the social entrepreneur has to think about the valuation of the social enterprise. The final question is how the social investor can exit the investment after a few years.
Secure the necessary entrepreneurial flexibility for the operations (voting rights only as far as necessary). Box 03 The dos and don’ts of negotiating the financing terms: . Grace periods could be an attractive option for social enterprises.
. the loan provider has far-reaching rights. .Consider the consequences in case of default. In the case of default or bankruptcy. A debt to equity swap gives the loan provider a certain share of the equity capital (ownership) if the social enterprise defaults on its debt.Avoid any personal liability.The social enterprise should also negotiate the interest payment and principal repayment schedule in case of distress to secure the necessary financial flexibility. . the social entrepreneur also needs to consider the worst-case scenario. The social entrepreneur should avoid any personal liabilities as well as too extensive debt to equity swaps. However.
a close personal interaction would be a better alternative.Family firms always install an advisory board (if not existing already) after the investment. one social enterprise sends a monthly overview of the financial situation to the members of the advisory board which convenes four times every year. As it is described in Box 04. reporting and corporate finance. profit distribution and future development of the enterprise that the social entrepreneur has to be certain that he wants to have the social investor as partner over the next years even in times of stress. .
. The advisory board can serve as a sparring partner challenging the decisions of the management in a favorable atmosphere and thus increasing the quality of the entrepreneurial decisions and the accountability of the management. That means that the social entrepreneur should adjust his expectations and use the existing skill set and network of the social investor. . the advisory board was kept in place even after the exit of the investor. Box 04 Achleitner et al. The members of the advisory board are usually representatives of the social enterprise. the social entrepreneur has to set up a working relationship with the social investor. social investors have extensive knowledge about corporate governance. Similar to social enterprises.The family firms benefit from the investors’ support in corporate governance. controlling. reporting. . Interestingly. There are so many potential conflicts such as social mission. Some social enterprises have operations across countries with different funders which all work in different settings.g.The management particularly appreciates the role of the advisory board as sparring partner. There are some constellations where the set-up of an advisory board is not recommendable. . (2008) conducted a study on minority investments of private equity funds in family firms.The inter-personal relationship between investor and family firm is the single most selection criterion for the family firm in finding the right investor. controlling and corporate finance but limited knowledge of the core activities of the company such as delivering the social services to the target group.A clear common understanding concerning the profit distribution is necessary to minimize the risk of conflicts of interest. In those cases an advisory board on a company level would be difficult to manage due to the complexity of the relationships. The installation of an advisory board is a practical way to involve the social investor in the operations and to give the social investor voting and control rights.3. representatives of the shareholders as well as independent experts which can either contribute expertise from the social or the business sector. However. a very important element is the inter-personal relationship between investee and investor. Therefore. family firms also have multiple goals.6 Working with Investors
After finding the right financing mix and closing the deal. E. Some of the key findings were: .
and the percent that re-enroll the following year. could include the after-school number of children participating in the program. the percent that drop out. al (2004) and Roder (2010) Input are those ressources which are put directly into the venture (e. The main questions are shown in the following figure. volunteering or money).riseproject.7 Performance Measurement
Performance measurement enables the social investor to control and monitor the work of the social entrepreneur. Commonly the organization running the program may not have the expertise or resources to evaluate whether an outcome has been achieved. Clark et al.org/ www.g. Performance measurement methods have similar information requirements as financial erformance analysts assessing the valuation or the credit rating of a company. desired outcomes could include higher self esteem for participants or self-esteem higher educational achievement for participants. nonprofit or project manager can measure or assess directly. for example. enroll Outcomes are the ultimate changes that one is trying to make in the world.” Although the impact value chain is a clear concept. Social entrepreneurs need to consider their impact value chain first. DBL_Methods_Catalog. (2004) have described outputs and outcomes as follows follows: “The key notion of the Impact Value Chain is to differentiate outputs from The outcomes. but it is just as important for that organization to define the desired outcomes and figure out which internal output measures are most likely to be correlated with desired outcomes. assets.riseproject. there is no yet a performance measurement method which is globally accepted and applicable. Those methods do need hose 16
.Outputs are results that a company.pdf. Outputs for an after school program.3. For the after afterschool program. A catalog describing the methods to assess the social impact can be found at www. Figure 4 Impact Value Chain
Illustration based on Clark et.
de and another standard developed in the United States is described in box 05. to improve the processes and to have a better documentation of the successes of the social enterprise.Glossary (definitions for common terms that are referenced in the indicators) (taken from http://iris. reporting is associated with additional efforts and costs at the beginning but there are also benefits.solid and comparable information to calculate their figures and ratings. and environmental performance) .
. Standards addressing the characteristics of social enterprises have been developed but there is not yet a globally accepted standard. B Lab and Rockefeller Foundation to create a common framework for defining and reporting the performance of impact capital. It allows the social entrepreneur to control the own target achievement. there is a reporting template which can be used for the reporting to the social investor. In the traditional capital markets standards such as the International Financial Reporting Standards (IFRS) or the United States Generally Accepted Accounting Principles (US-GAAP) guarantee that companies are reporting on a comparable basis. and location) . Box 05 The Impact Reporting & Investment Standards (IRIS) was founded by Acumen Fund. The IRIS framework consists of six parts: .Financial performance (commonly reported financial indicators) . employees.thegiin.Product impact (indicators that describe the performance and reach of the organization's products and services) . operational model.social-reporting-standard.org/iris-standards)
In the appendix on page 24.Product description (indicators that describe the organization’s products and services and target markets) .Operational impact (indicators that describe the organization’s policies.Organization description (indicators that focus on the organization’s mission. The Social Reporting Standard (SRS) developed in Germany can be seen at www. From the social entrepreneur’s perspective.
The exit routes for equity capital. liquidation. debt capital and grant funding are . an initial public offering on a social stock exchange or the liquidation . When the social investor stops his grant funding after a few years the social enterprise either needs a follow up financing or should have reached financial selffollow-up self sustainability.
There are also exit considerations for grant funding. A social an issues investor can fund 10% of the total budget or take over part of the overhead costs for a given period of time.g. (“financial flexibility” Social investor accepts equity in exchange for the loan (“debt to equity swap”) swap”). there are three scenarios: Social investor institute bankruptcy proceedings to recover part of the loan institutes (“liquidation”).8 Exit Consideration
In the chapter Negotiating the Financing Terms a few aspects related to exit considerations ed were already discussed. In the case of debt capital. The refinancing means that another social investor is willing to financ the social finance investor for the next period. there can either be a sale of the shares to a third party investor. shown in the following figure. The buy-back arrangement implies that the social entrepreneur has sufficient funds to buy back the share of the social investor. a buy-back arrangement. Social investor extends the period of the repayment schedule (“financial flexibility”).3. 18
. Some social investor fund a significant Some share of the social enterprise’s operations and a exit can lead to funding issues. Figure 5 Exit considerations
Source: Achleitner & Spiess-Knafl (in press) Knafl In the case of equity capital. there can either be a repayment of the loan or the refinancing of the loan. non non-repayment of the loan or long-term delay on scheduled payments). If the social enterprise defaults on the loan (e.
3 An overview of social stock exchanges can be found in chapter 4. They collect funds from individuals or foundations which they invest in a given sector such as microfinance or the solar industry.
. Social investment funds apply the same principle in the social sector. A social stock exchange can be an attractive financing option for social enterprises with a proven business model and significant financing needs. However. Companies have access to a large capital pool and investors can sell their shares or bonds without delay at any time.11 “Social Stock Exchanges” on page 49. They also take deposits from savers and give loans to individuals and companies.1 Social Capital Markets Value Banks
Value banks have the same role as commercial banks in the traditional capital markets. This new form of financing in the social sector is known as Venture Philanthropy.
Social Investment Advisors
The traditional role of investment banks is the financial advisory of corporate clients and the matching of supply and demand.9 ”Social Investment Advisory” on page 46. High Engagement Philanthropy or Social Venture Capital
Due to strict regulatory requirements it is not yet clear if and when the first social stock exchange will start trading. A list of social investment advisors can be found in chapter 4. An overview of those specialized loan providers can be found in chapter 6. At the moment. Social investment advisors take over the same role in the social sector. On stock exchanges companies can issues shares or bonds which are then traded continuously. three social stock exchanges with trading activities are being incorporated.
Social Investment Funds
Investment funds act as intermediaries between demand and supply by bundling funds from investors which they subsequently invest in certain asset classes. the savers sometimes accept a lower interest rate which can be passed on to the social enterprise. those banks focus on the social sector and have therefore a better understanding of the business models and the specific need and requirements of social enterprises.
Venture Philanthropy Funds
Over the last 15 years high-net worth individuals and foundations have started to rethink their funding strategies.
Social Stock Exchanges
A stock exchange is an efficient public platform to match supply and demand. In addition. They support the social enterprise in setting up an appropriate financing structure and finding the right investors.4 Appendix
4.5 ”Value Banks” on page 39. They began to adopt venture capital techniques for their funding strategies. This approach reduces the transaction costs and the risk through diversification effects.
Venture Philanthropy funds also support the social enterprise on a non-financial basis with management consulting or pro-bono services.
Rating and research agencies publish ratings and research reports on publicly listed companies to support investors in their capital allocation decisions. In the social sector funding consultancies take over this role. they can support the social enterprise over a longer period of time and use tailored financing (also including grant funding).
. social investors concentrate their funding and support only a limited number of social enterprises. Due to their similarities. Therefore.6 "Social Investors with General Investment Focus” on page 27 as well as chapter 4. social investment funds and venture philanthropy funds are shown in the same overview.10 ”Funding Consultancies” on page 48.7 “Social Investors with Focus on Microfinance” on page 37. They publish research reports on different sectors and advise funders which organizations to support. An overview of the social investors can be found in chapter 4. An overview of those consultancies can be found in chapter 4.John (2006) defines this approach as having the following characteristics: High engagement Tailored financing Multi-year support Non-financial support Organisational capacity-building Performance measurement
External financing is either used to cover negative operating cash flows or to finance long-term investments such as buildings. The service is either paid by the target group.2 Internal and External Financing
Access to capital can be classified as: Internal financing External financing
Internal financing is provided by cash flows generated through the operating activities of the social enterprise. term The different financing sources and instruments are shown in the following figure. Figure 6 Classification of the financing structure
Source: Achleitner et al. equipment or infrastructure. (2011)
.4. third party beneficiaries or third-party public authorities.
The stable and predictable cash flows are necessary as the debt capital providers receive an annual interest payment. Debt capital is provided on a temporary basis and requires the repayment after a few years. 10% of total shareholdings). Grants are regularly provided only for certain projects and usually exclude overhead costs and expenditures for the development of the social enterprise. Control and voting rights depend upon the legal form of the enterprise and are usually structured in the contract between investor and investee. equity and debt capital.
Debt capital can be used for long-term investments or project financing which promise stable and predictable cash flows over the next years.g. the social investor has certain control and voting rights.3 Financing Instruments Grants
The traditional form of financing in the social sector is based on grants which can be either provided in monetary or non-monetary form such as volunteering or in-kind contributions. The interest payment can be linked to the profits of the company whereas the total amount is repaid after a certain time period. Despite their importance.
As illustrated in figure 4. The grant character can be explained through the fact that there are no interest costs and in certain pre-agreed scenarios the financing instrument is converted into a grant. Financing instruments with hybrid capital character include: Recoverable grants Forgivable loans Convertible grants Revenue share agreements 22
.7 years. Normally. the loans are provided for 5 . Furthermore. The social investors gives the social enterprise a certain sum in exchange for a share of the company (e.4. The social investor receives no regular annual payments but a share of the profits generated by the social enterprise. not predictable and impose high fundraising costs on the social enterprises.
Equity capital is the financing instrument with the highest risk for the investor.
Mezzanine capital combines elements of debt and equity capital and represents a convenient financing alternative if pure equity or debt capital is not applicable. grants are usually short-term oriented. there are some shortcomings related to grants. The structuring flexibility makes mezzanine capital an attractive option for social entrepreneurs as well as social investors. Grants are usually provided by foundations or individuals and continue to be an important funding source for social enterprises. hybrid capital contains elements of grants. Besides a share of the future profits.
A recoverable grant is a loan which has only to be paid back if the project reaches certain previously defined milestones. Figure 7 Financing instruments
Source: Achleitner et al. This risk sharing model can be used for the repayment of the financing and gives the social enterprises financial flexibility. A forgivable loan is a loan which is converted into a grant in the case of success. A convertible grant is another financing instrument with hybrid capital character. (2011) To conclude. This mechanism can be used if success of the project enables the social enterprise to repay the loan to the social investor. Revenue share agreements are financing instruments where the investor finances a project and instruments receives a share of the future revenues.
. If the milestones are not reached the recoverable grant is converted into a grant. the following table shows the description and implications of the different financing instruments. The social investor provides the enterprise with a grant which is converted into equity in the case of success. If the social enterprise reaches the goals agreed beforehand between investor and investee the loan does not to be repaid.
Favorable development over the period (strengths) [add information of the successes and the areas which developed favorably] 5. Activity development over the period [add information on the key developments of the last reporting period] 4. Unfavorable development over the period (weaknesses) [add information of the failures and the areas which developed unfavorably] 6. Reasons if the annual budget has been amended [add information why the budget has been changed over the reporting period] 8. Measured social impact Results over Half Year ended Number of people employed Number of activities Number of website visitors Numbers of press articles published [add further relevant numbers] 3.4. Comments and additional information on the social impact figures [add information about the development of the social impact figures] 7. Profit & Loss (€) Half Year ended Sales EBIT Net Income Costs 2.4 Reporting Template
Name of the Organization: [add the name of the organization] 1. Key targets for the next Half Year [add information on the key targets for the next reporting period] ____ ____ ____ ____ ____ ____ ____ ____ ____ Revised annual budget ____ ____ ____ ____ dd/mm/yyyy
Business Model [add information about the business model including access to the target group and description of the target group] 3. Number of Employees ______ employees 5. Year of Foundation The organization was established in ______.5 Investment Template
Name of the Organization: [add the name of the organization] 1. The headquarter is based in ______ 4. Description of Markets a) Current market [add information on the current market] b) Market Potential / Growth Opportunities [add information on the potential national / international demand and potential growth strategies] c) Competitors [add information on your competitors and explain the difference to your approach]
. Streams of Revenues (including donations and governmental money) of the past 3 years 2008: US$ ______ 2009: US$ ______ 2010: US$ ______ 6. Information about the Founder [add information about the founder and the idea that led to the foundation] 2.4.
That can include the key figures you are monitoring on a regular basis or what information you are reporting to the Board of Directors / Advisory Board. Governance Structure Board of Directors / Advisory Board ______ ______. Use of Capital [add information on how the capital will be used] 11. Grants and Awards [add information on the grants and awards the social enterprise has received in the past] 9. role outside of social enterprise ______ ______. Executive Director ______ ______. Chairman.6. role outside of social enterprise ______ ______. role within social enterprise 7. role outside of social enteprise Management ______ ______. role outside of social enteprise ______ ______. Requested Amount of Money US$ ___ 10. Reporting System [add information on the specific reporting system you are using.] 8. Type of Investment you request (Loan or Equity)
. role outside of social enteprise ______ ______. role within social enterprise ______ ______.
mustoe@riantacapital. NY 10011 United States of America +1 212 566-8821 mtada@acumenfund.Interest-free loans .4.
. with an emphasis on agriculture.arthaplatform. Suite 315 New York. which sustainably improve the life opportunities for socially disadvantaged children.
.Equity capital .Convertible grant
Agriculture Cleantech Livelihoods Water
Auridis invests globally in endeavours.Support of young children from sociallydisadvantaged families
.Debt capital . Curzon Street. combined with large doses of business acumen.com www.org Artha Initiative Leconfield House.6 Social Investors with General Investment Focus
Social Investor with short Mission Statement Main Financing Instruments
Debt capital Equity capital Guarantees “Lab Investments” (experimental investments)
Main Sector focus
Acumen Fund 76 Ninth Avenue.acumenfund. energy and livelihoods.org www. Third Floor London W1J 5JA United Kingdom +44 20 7016 4300 anna.Grants
German-speaking countries and some international activities
.com Auridis Gruenstrasse 18 41460 Neuss Germany +49 2131 1511842 firstname.lastname@example.org
Acumen Fund is a non-profit global venture fund that uses entrepreneurial approaches to solve the problems of global poverty. can build thriving enterprises that serve vast numbers of the poor.
East Africa India Pakistan
Water Health Agriculture Energy Housing
The Artha program strives to support high impact sustainable enterprises that are validating the market niche for providing goods and services to the ‘bottom of the pyramid’ in India. Small amounts of philanthropic capital.
Africa Asia Mid Americas
. The foundation seeks projects that are innovative with a strong social impact. water. are led by motivated and committed social entrepreneurs.Ecological
BonVenture Pettenkoferstrasse 37 D-80336 München Germany +49 89 2 00 01 2530 info@bonventure.Marginalized groups . young people and the elderly . St Andrew’s House.bonventure.org www. sanitation and emergency and hygiene and humanitarian aid
The Children’s Investment Fund Foundation 7 Clifford Street London W1S 2WE United Kingdom +44 207 440 2357 info@ciff.Children living in poverty in developing countries.Children. and will be financially self-sustaining in the long term.
Equity capital Mezzanine capital Debt capital Grants
.No sector focus
.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
BonVenture funds companies and organisations with a social purpose in German-speaking countries.de www.venturesome.de
The Children’s Investment Fund Foundation (UK) aims to demonstrably improve the lives of children living in poverty in developing countries through large-scale and sustainable impact. specifically HIV/AIDS.ciff.org
CAF Venturesome is a social investment fund that provides investment to help charities and social enterprises deliver on their mission. 18-20 St Andrew Street London EC4A 3AY United Kingdom +44 3000 123 300 venturesome@cafonline.Employment and education .Debt capital .
.org Charities Aid Foundation 7th Floor.Equity capital
b foundation invests in and supports social entrepreneurs who identify commercial opportunities in social issues.nl
.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
Convivatus Social Capital Schnabelweg 60 8832 Wilen Switzerland + 41 44 380 1650 frank.Mezzanine capital .
.Young people .Financial technology companies providing consumer finance products
Core Innovation Capital 611 Broadway New York.Equity capital
.hinrichs@convivatus.Compatibility of family and work .nl www.Services for the elderly
Core Innovation Capital invests in the most innovative companies serving underbanked consumers. NY 10012 United States of America +1 212 780 0193 email@example.com
Debt capital Convertible loans Mezzanine finance Equity capital Convertible grant
The Netherlands Africa
.convivatus. CIC focuses on early growth-stage forprofit companies whose management shares its vision that technology-driven solutions focused on delivering the highest value to underbanked people can create great businesses and strengthen the Amercian middle class. The foundation strives for a structural improvement of the wellbeing of people who are marginalized or living in poverty.Equity capital
. Convivatus wants to be a catalyst for positive social change.b Foundation IJsseldijk 1 8194 LA Veessen The Netherlands +31 578631111 info@dobfoundation.Debt capital . d.dobfoundation.corevc.o.com www.com
Convivatus Social Capital provides uccessful social entrepreneurs the strategic and financial basis for sustainable growth.No focus
d. In this way.
Grants Debt capital Equity capital Convertible debt
. rue Vaneau 75007 Paris France +33 14548 8856 contact@ fondationdemeter.org www. supporting and scaling innovative ideas that directly and positively impact the lives of the world’s most impoverished people.no www.Microfinance
.org Ferd Social Entrepreneurs P.Children and young people .theehfoundation.
Grants Guarantees Convertible loan Equity capital Convertible grants
.com Fondation Demeter 44.O.Box 34 1324 Lysaker Norway +47 67 10 80 50 / +47 957 21 740 kgl@ferd.Grants
.Children and young people
Fondation Demeter helps charities improve their operating processes and governance principles so as to make the best use of their resources and to move towards self-sufficiency
.ferd.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
The EH Foundation Kappelistrasse 41 704 Herrliberg Switzerland +41 7946 90396 eva@theehfoundation.Interest-free loans .com
The EH Foundation’s goal is to be the partner of choice for both social entrepreneurs and social philanthropists in sourcing.“Bottom of the Pyramid” solutions
Ferd Social Entrepreneurs supports social entrepreneurs who work to help ensure that children and young people can realize their goals and recognize that they do have opportunities.
Ricardo Margáin 575 Parque Corporativo Santa Engracia San Pedro Garza García.Base of the Pyramid
.ignia.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
Fondazione Oliver Twist Onlus Via Bigli.fondazioneolivertwist. N. 21 20121 Milan Italy +39 277718726 info@fondazioneolivertwist. nongovernmental organization.Debt capital .Children and young people
The Ford Foundation is an independent. México 66267 +52 81 8000 7165 www. 10017 USA +1 (212) 573 5000 www. both as consumers as well as active participants in productive value chains.com.org www. LLC Av.
Debt capital Equity capital Loan Guarantee Grants
Democracy Economic fairness Education and research Environment Human rights Health Social Justice
IGNIA is a Mexian venture capital investment firm that supports the founding and expansion of high growth social enterprises that serve the base of the socio-economic pyramid.org
Fondazione Oliver Twist Onlus operates in the social field by setting up and supporting projects designed to help minors in difficult circumstances
.L.org Ford Foundation 320 East 43rd Street New York.fordfoundation. The fund aims to give all people the opportunity to reach their full potential. By providing effective responses to the enormously underserved needs of low income populations. IGNIA empowers entrepreneurship and generates social impact while creating attractive financial returns for its investors. nonprofit. contribute to society. and have a voice in the decisions that affect them.Equity capital
Inspiring Scotland Riverside House 502 Gorgie Road Edinburgh EH11 3AF United Kingdom +44 131 442 8760 enquiries@ inspiringscotland.Debt capital .Equity capital
Africa China India Southeast Asia Latin America
.uk LGT Venture Philanthropy Städtle 28 9490 Vaduz Principality of Liechtenstein +41 44250 8281 lgt.Relief of human suffering .com www.org.Children .
.Creation of sustainable livelihoods
.Education . Impetus achieves this through its highly effective model of venture philanthropy which has three key components: unrestricted strategic funding.
The objective of LGT Venture Philanthropy is to raise the sustainable quality of life of less advantaged people especially those in the developing world
.uk www. very hands-on support from the Impetus investment team and specialist support for capacity firstname.lastname@example.org
Inspiring Scotland’s aims to change people’s lives for the better through significant long term funding and development support for Scotland’s charities.org.org.impetus.org.Grants
.inspiringscotland.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
Impetus Trust invests in ambitious charities and social enterprises that fight economic disadvantage.lgt. It seeks to create sustained change and to achieve long lasting impacts for Scotland’s most vulnerable people and communities through partnership and collaboration and by tackling tough social issues.uk www.Poverty reduction
Impetus Trust 20 Flaxman Terrace London WC1H 9PN United Kingdom +44 203 3843940 info@impetus.
PO BO 20 6740 AA Lunteren The Netherlands + 31 31859 6400 poostlander@noaber.Employment PhiTrust Active Investors 41 rue Boissyd’Anglas 75008 Paris France +33 15535 0755 martina.Equity capital .Culture and recreation .Integration of +353 1 8088800 minorities info@onefoundation.Education and research .Environment .Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
noaber Foundation Dorpsstraat 14.Debt capital its foundation and social investment funds. they act as an ‘entrepreneurial philanthropist’.com
The noaber Foundation aims to initiate and support the acceleration of innovations in the civil society where ‘noabership’ (neighbourship) is key. The One Foundation is a private philanthropic fund that will spend down its capital over ten years (2004-2013). To reach their aims.Development and housing .com www.ie .onefoundation.Poverty & disadvantage Dublin 4 .Debt capital . Phitrust focuses its investments both at a European level as well as a worldwide level.ie www.com www.Grants
Europe Africa Asia North America
.Equity capital companies in the fields of social business through . education and community building.
The One Foundation 35 Barrow Street .Mental health Ireland . These innovations are related to health and care.phitrustpartenaires.com
PhiTrust is dedicated to funding and mentoring .vonrichter@phitrust.Cleantech .Health .Microfinance .Health
The One Foundation aims to improve the life chances of disadvantaged children and young people.
We recognise that young people face a journey from birthplace to workplace with numerous obstacles preventing them reaching their full potential.
.org www. markets. ResponsAbility is constantly on the lookout for entrepreneurial. and adults who are overcoming barriers to employment.Grants
.com www. CA 94105 United States of America +1 (415) 561-6677 www. Suite 320 San Francisco.Fair trade producers .com
. It gives funding and business assistance to a carefully selected portfolio of social enterprises that employ young people disconnected from school and work.Equity capital information. investing in these ideas directly or indirectly via investment products. employment or training (NEET) so they can reach their full potential.Microfinance institutions . youth . London EC2A 3DB United Kingdom +44 845 838 7330 info@privateequityfoundation. products and .Equity capital .Small and mediumsized enterprises in developing countries
responsAbility Social Investments Josefstrasse 59 8005 Zurich Switzerland +41 44250 9930 info@responsAbility.privateequityfoundation.redf.Children.Grants
United States (California)
The Private Equity Foundation’s core mission is to reduce the number of young people not in education.Employment
responsAbility provides commercial finance to organizations and initiatives that give people at the base of the pyramid access to services. Rivington Street.Children and young people
REDF is a San Francisco-based venture philanthropy organization that invests in nonprofit-run businesses.
.Education and research .Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
Private Equity Foundation 2 Bath Place.Debt capital . innovative business models in developing countries and emerging markets.org REDF 631 Howard Street.responsability.
10-14 79098 Freiburg Germany +49 761 2020 172 contact@sfa-pv. NY 10003 +1 (212) 227-6601 info@robinhood.Debt capital .Mezzanine capital
. therefore the general approach comprises the entire solar PV value chain and related financial services.org
.Debt capital .Grant
New York City
.org www. 8 Wyndham Street Central. More than single social entrepreneurs have to be supported to accomplish a systemic change.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
Robin Hood Foundation 826 Broadway.robinhood.sfa-pv. social service and academia backgrounds. SIC invests in social enterprises driven by clearly defined missions for creating positive social or environmental impact
. youth Education and research Poverty Health
Social Investors Club is a social investment company established in Hong Kong in 2010. Formed by 10 socially-minded investors with diverse business.Equity capital . 9th Floor New York.org
Robin Hood targets poverty in New York City by finding and funding the best and most effective programs and partnering with them to maximize results.com www.org www.Solar industry
Canopus Foundation Grünwälderstr. finance.6 billion people without access to electricity.No focus
Social Investors Club 29/F.socialinvestorsclub.com
Solar for All is a global initiative that wants to take a big step ahead in making solar energy affordable to the 1.
Latin America Africa Asia
. Hong Kong +852 21568876 info@socialinvestorsclub.
Table 2: List of social investors Source: EVPA.Debt capital .socialventurefund. which have innovative and entrepreneurial driven solutions for urgent social and environmental challenges. Websites
.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
Social Venture Fund Sendlingerstr.com
The Social Venture Fund invests in social businesses.Mezzanine capital
. The Fund provides support when it is not possible to acquire traditional sources of capital.com www. 7 80331 Munich Germany +49 6960 9184-15 info@socialventurefund.Equity capital .
small and medium enterprises in emerging and least developed economies. the fund makes capital available to financial institutions providing credit to clients with economic opportunities but limited access to financial services
.com Dual Return Fund Absolute Portfolio Management Wallnerstraße 3 / 17 1010 Vienna Austria +43 1 533 59 76 email@example.com Social Investors with Focus on Microfinance
Social Investor with short Mission Statement Main Financing Instruments Geographical Focus
Africa Asia Latin America Former Soviet Union Eastern Europe
Main Sector focus
ASN Bank Alexanderstraat 28 2514 JM Den Haag The Netherlands +31 70 356 933 www.Guarantees .Microfinance institutions
The Dexia Microcredit Fund is the first commercial investment fund designed to finance microfinance institutions specialized in financial services to small companies in emerging markets (co-managed by BlueOrchard Finance).Equity capital
. The fund maximizes both the risk-return profile to benefit the investor and the social outreachin breadth and depth to micro.
. To achieve this.com www.Debt capital .blueorchard.4.Debt capital
Africa Asia Central and Eastern Europe Latin America
The ASN-Novib Fund aims to promote a broad participation of all groups in the market economy of developing countries.Microfinance institutions
Dexia Microcredit Fund 32 Rue Malatrex 1201Genève Switzerland +41 22 596 4777 firstname.lastname@example.org
The Dual Return Fund has a double bottom line strategy.Debt capital
.Debt capital through the sustainable provision of additional .Debt capital
Africa Asia Europe Latin America
Oikocredit.Interest-free loans .Equity capital development finance.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
The European Fund for Southeast Europe aims to foster economic development and prosperity .com www.Grants
. 6 60322 Frankfurt am Main Germany +49 69 9778765026 s.oikocredit.O.org www.lu
Fondation Demeter helps charities improve their operating processes and governance principles so as to make the best use of their resources and to move towards self-sufficiency
. churches and others to share their resources through socially responsible investments and by empowering disadvantaged people with credit.efse.
. rue Vaneau 75007 Paris France +33 14548 8856 pascal@ceresfinance.Microfinance
Fondation Demeter 44. The fund offers long-term funding instruments to qualified partner lending institutions to better serve the financing needs of micro and small enterprises and low-income private households
. Box 2136 3800 CC Amersfoort Netherlands +31 33422 4040 info@oikocredit. promotes global justice by challenging people. as a worldwide cooperative society.Children and young people .djikic@finance-in-motion.Microfinance institutions
European Fund for Southeast Europe Eschersheimer Landstr.
edu www.responsability.Small and mediumsized enterprises in developing countries
responsAbilitySocial Investments Josefstrasse 59 8005 Zurich Switzerland +41 44250 9930 info@responsAbility.
. innovative business models in developing countries and emerging markets.Fair trade producers . The Omidyars gave the university $100 million to create a fund that would be invested entirely in international microfinance initiatives.nl
Table 3: List of social investors Source: Websites 39
.Microfinance institution . investing in these ideas directly or indirectly.
Omidyar-Tufts Microfinance Fund microfinance@tufts.Microfinance institutions
SNS Institutional Microfinance Fund Pettelaarpark 120 5216 PT 's-Hertogenbosch The Netherlands +31 73683 3355 www.snsam.Debt capital
Africa Eastern Europe Latin America Southeast Asia
. The fund does not grant loans to individual businesses but lends money to or invests in the share capital of microfinance institutions.Equity capital
responsAbility provides commercial finance to organizations that give people at the base of the pyramid access to services.Debt capital . responsAbility is constantly searching for entrepreneurial.com www.com
The SNS Institutional Microfinance Fund aims at providing resources for small self-employed operators in a large number of developing countries against rates that are in accordance with the market.Social Investor with short Mission Statement
Main Financing Instruments
Main Sector focus
The Omidyar-Tufts Microfinance Fund was launched in 2005 through a unique partnership between Pierre and Pam Omidyar and Tufts University.Equity capital .Debt capital . products and information.Equity capital
As the leading provider of ethical banking services and a pioneer in the implementation of social and environmental standards.Organizations operating within the third-sector that carry out civil society oriented economic projects
BancaPopolareEtica Via NiccolòTommaseo 7 35131 Padova Italy +39 498771111 www. inspired by the values of a sustainable social and human development. ABS gives encouragement to the Swiss banking and financial markets.8 Value Banks
Bank including short Mission Statement Geographical Focus Main Lending Focus Contact Details
The Alternative Bank Schweiz emphasises ethical principles instead of maximum profits.it
Alternative Bank Schweiz Amthausquai 21 4601 Olten Switzerland +41 62 206 16 16 contact@abs.Social or ecological housing .Organic agriculture.bancaetica.
Banca Popolare Etica was created in 1999 by a big coalition of the major Italian social organizations who wanted to create a place where savers.4. .
. may meet socioeconomic initiatives.bas. driven by the common desire of a more transparent and responsible management of financial resources.ch www.
Box: 13176 La Paz . enlightened. healthy. Retail and Corporate
United Kingdom Charity Bank finances social enterprises.org www.O.com.No focus
Charity Bank 194 High StreetTonbridge Kent TN9 1BE United Kingdom +44 1732 774040 enquiries@charitybank.
. 289 P.Bank including short Mission Statement
Main Lending Focus
Contact Details BancoSol CalleNicolás Acosta No. thereby assisting BRAC and stakeholders build a "just.Entrepreneurs with a small capital base but with dynamic adjustment capabilities
Brac Bank aims to build a profitable and socially responsible financial institution focused on Market and Business with growth potential.bo www. with the support of depositors and investors who want to use their money to facilitate real social change
.bancosol.com. charities and community organisations. providing them with high-quality.com
Bolivia Banco Sol is a bank that offers opportunities to the lowest-income sectors for a better future. integrated financial services.com www.
.Microfinance (in a related program) .Bolivia +5912 2484242 email@example.com BRAC Bank 1 Gulshan Avenue Gulshan-1 Dhaka 1212 Bangladesh +880 2885 2233 enquiry@bracbank. democratic and poverty free Bangladesh".SME.
gls. 1. sustainable banking business means the incorporation of social. and on criteria that include environmental. meets the needs of others in a dignified way.dk www. social and ethical aspects in addition to financial considerations. Merkur pursues a situation where the individual.de
Merkur Cooperative Bank is founded on the idea of conscious handling of money.
Agriculture Development aid Education Health care Social welfare
GLS Bank Christstr.
.no www. The bank emphasises building alliances between depositors and lenders and to underpin this it practises transparency as a carrying principle. conducting a professional. based on his own insight.
Education (private schools) Agriculture Healthcare Housing Microfinance
For GLS Bank.Environmental. 9 44789 Bochum Germany +49-234-5797-0 www.cultura. 1620 Copenhagen V Denmark +45 7027 2706 kbh@merkur. The money of our customers is invested exclusively in companies and projects whose performance under the above mentioned criteria is outstanding. social and cultural sectors
Merkur Cooperative Bank Vesterbrogade 40.dk
Cultura Bank's main task is to finance projects which benefit society and contribute to a better natural environment.merkur.Bank including short Mission Statement
Main Lending Focus
Contact Details Cultura Bank Holbergsplass 4 i Oslo 0130 Norway +47 2299 5199 cultura@cultura. ecological and economic criteria.
. We manage the financial.No focus
New Resource Bank 405 Howard Street. Banco de la Microempresa Av. and social impacts of our activities to promote the global well-being of future generations. Domingo Orue 165 Surquillo Peru +51 319 9999 www.pe
Mibanco is committed to offering their communities opportunities for progress and access to the financial system.com www. Suite 110 San Francisco.. environmental.newresourcebank.
new resource bank’s mission is to advance sustainability with everything we do—the loans we make.com. and our commitment to putting deposits to work for good.mibanco. the way we operate. To us. banking isn’t just a service—it’s a way to create a better world.Bank including short Mission Statement
Main Lending Focus
Contact Details Mibanco. CA 94105 United States of America +1 415 995 8100 ggroff@newresourcebank.
. Through strong financial performance. wholesale.North-South projects (fair trade. individuals and families.com
Triodos Bank finances companies.Social business .Culture and society . non-profit organizations. Triodos Bank´s mission is to help create a society that promotes peoples´ quality of life and that has human dignity at its core
Africa Asia Europe South America
Vancity aims to be a democratic.triodos.No focus
Vancity PO Box 2120 Station Terminal Vancouver.
Triodos Bank Nieuweroordweg 1. We will partner with respected community institutions to provide banking services to small to medium-size businesses. health food stores and renewable energy ) . Suite 100 Oakland.Nature and the environment sectors (organic agriculture. and innovative provider of financial services to their members.
. affordable-housing developers.Housing . with the support of depositors and investors who want to encourage corporate social responsibility and a sustainable society. 3704 EC Zeist The Netherlands +31 30 693 65 00 www. CA 94612-3206 United States of America +1 51055 08400 mybank@OneCalBank.com www.OneCalBank. they serve as a catalyst for the self-reliance and economic well-being of our membership and community.Green industries
OneCalifornia Bank 1438 Webster Street. community facilities.vancity. institutions and projects that add cultural value and benefit people and the environment.Bank including short Mission Statement
Main Lending Focus
OneCalifornia Bank will improve economic opportunity for low-to moderate-income communities throughout California. BC Canada +1 604 877 7000 www.
xacbank. The Bank will provide equitable access to transparent.Environment
Table 4: Value Banks Source: Websites.O.Box-46/721 Ulaanbaatar – 14200 Mongolia +97611 318185 www. including its traditional Microentrepreneurs as well as Small and Medium businesses. reliable and responsive banking products and services to the Bank's clients.Education .mn
Xac Bank aims to contribute to sustainable development of Mongolia that can come only from educated and skilled people and competitive and dynamic businesses concerned equally about Planet. and Profit.Bank including short Mission Statement
Main Lending Focus
Contact Details XacBank Prime Minister Amar's Street Sukhbaatar district P.
. People. Global Alliance for Banking on Values
.lightyearsip. We assist our clients distinctive and sustainable values across the globe.l.4.à. Suite 1610 Arlington.com www. partners and the field of social entrepreneurship. sanitation and the like
Bamboo Finance S. livelihood opportunities.net
Light Years IP is a non-profit organization dedicated to alleviating poverty by assisting developing country producers gain ownership of their intellectual property and to use the IP to increase their export income and improve the security of that income.com
avant-gardist identifies.com www.bamboofinance. We achieve this by promoting appropriate finance for the growth of enterprises which are having a direct positive impact on society.
. corporations.com Light Years IP 1700 N Moore St.avant-gardist. education. trademarks and licenses) to secure more sustained and higher export income. energy. healthcare.No Sector focus
Bamboo Finance’s mission is to create value for our investors. design and implement social projects that help foundations. banks and nonprofits increase their social impact.Services for low income communities by providing access to affordable housing. VA 22209 United States of America +1 703 600 8324 firstname.lastname@example.org www.
.r. water.IP tools (patents. We leverage our client’s expertise and and insights to benefit society and sharpen their competitive advantage
. 32 rue de Malatrex 1201 Geneva Switzerland +41 22 596 4750 email@example.com Social Investment Advisory
Social Investment Advisory with short Mission Statement Geographical Focus Main Sector Focus Contact Details Avant Gardist Johannesgasse 18 1010 Vienna Austria +43 1229 7139 office@avant-gardist.
org.Social Investment Advisory with short Mission Statement
Main Sector Focus
Contact Details Root Capital 955 Massachusetts Ave. Our role is to devise the financial structures and raise the capital to enable this to happen.org www. we believe we have a team that can find the nexus where "social purpose meets financial promise.No Sector focus
Total Impact Advisors mbrownrigg@ totalimpactadvisors.No Sector focus
Social Finance Ltd 131-151 Great Titchfield Street London.totalimpactadvisors. MA 02139 United States of America +1 617 661 5792 firstname.lastname@example.org www. development.socialfinance. innovation.org. organisations seeking to solve them need sustainable revenues and investment to innovate and grow." Table 5: Social Investment Advisory
. if social problems are to be tackled successfully.rootcapital.com
Source: Websites 47
root capital envision thriving rural communities where small-scale producers have access to markets and financial services to lift themselves out of poverty while strengthening the health of our planet. W1W 5BB United Kingdom +44 207 667 6370 info@socialfinance.
Latin America Africa
Total Impact Advisor's mission is to advise both entrepreneurs and those seeking to maximize the social impact of their capital. With our deep roots in banking. 5th floor Cambridge.com www. Social Finance believe that. public policy and private investment.Small grassroots businesses
Many charities and social enterprises face serious financial challenges that stop them from carrying out their work effectively.
we build bridges between social investors and nonprofit organizations.Global
.4. Table 6: Funding Consultancies
.org www. Using our unique.phineo.UK .philanthropycapital.10 Funding Consultancies
Funding Consultancy with short Mission Statement Geographical Focus Main Consulting focus Contact Details New Philanthropy Capital 185 Park Street 3rd Floor London SE1 9BL United Kingdom +44 20 7620 4850 email@example.com
New Philanthropy Capital (NPC) is a consultancy and think tank dedicated to helping funders and charities achieve a greater impact. multistage analysis process.No Focus
Germany PHINEO’s mission is to strengthen the nonprofit sector and civil society. so that more lives can be changed for the better.org www. NPC's mission is to put effectiveness at the heart of how charities work and how funders give.org Phineo Anna-Louisa-Karsch-Straße 2 10178 Berlin Germany +49 30 520065400 info@phineo.
The Social Stock Exchange is designed to provide access to capital – specifically risk capital – for organisations that are for-profit social purpose businesses.com
Source: Websites. allowing them to more rapidly expand the impact of their activities. legal requirements for establishing a 'real' exchange are being clarified in collaboration with BaFin (the German federal financial supervisory agency). green.and ethical consumerism.com www. Table 7: Social Stock Exchanges
. housing. transport.organisations with a social. 19 10179 Berlin Germany +49 30 6098810 10 firstname.lastname@example.org green-technology.11 Social Stock Exchanges
Social Stock Exchange with Short Mission Statement
Contact Details Impact Investment Exchange (Asia) 93A Amoy Street Singapore 069913 +65 6221 7051 email@example.com
Impact Investment Exchange Asia aims to provide Social Enterprises in Asia with greater access to capital.No trading yet
Pradeep Jethi.No trading yet
.com www.No trading yet
NExt SSE is a project committed to bringing capital to social ventures . CEO: firstname.lastname@example.org NExT SSE c/o KonvergentaInterZero GmbH Rungestr.nextsse. Personal information 49
. ethical or Berlin ecological focus and a sound business model. most likely to be from sectors that create social value such as health. In the months to come.4. and clean.
5 Task Force Members
Martin Burt Fundación Paraguaya Macarena Currin Rodelillo Foundation
Enayetullah Iftekhar Waste Concern
Christopher J. Elias PATH (Programme for Appropriate Technology in Health)
Andreas Heinecke Dialogue Social Enterprise
Garth C. Japhet Heartlines
Timothy Ma Kam Wah Senior Citizen Home Safety Association (SCHSA)
Shona McDonald Shonaquip
Kovin Naidoo International Center for Eye Care Education (ICEE)
Ziad Refai Tamweelcom
Arregui Álvaro Rodríguez IGNIA Compartamos Banco
Pierre Tami Hagar International
Silverius Oscar Unggul Telapak
Bart Weetjens HeroRAT
Ariel Zylbersztejn Cinepop
.............. 30 Financing instruments . 18......................... 20 GLS Bank ............ 33 Total Impact Advisor ............................ 18 External financing .................. 41 BonVenture ............................................................. 35 root capital ............................................... 46 Bamboo Finance ......................................................................... 40 Artha ........... 11 SNS Institutional Microfinance Fund ... 19 Social investment funds ... 34 Recoverable grants.............................. 19 Xac Bank . 38 Exit ...................................................................................................................................... 33 Private Equity Foundation ................. 22 IGNIA.................................. 22 European Fund for Southeast Europe ................................... 36 Solar for All ................................................................................................................................. 39 Social capital markets .........................................................................................................................o.............................................. 46 Merkur Cooperative Bank ....... 33 Oikocredit ..... 38 Fondazione Oliver Twist Onlus ....... 43 Negotiating the financing terms.. 29 Debt capital .................................................................... 11 Selection process .............................................................. 30.................. 45
........................... 50 The One Foundation .. 49 Social stock exchanges ............................................................. 44 Performance measurement.......................................... 42 Grants .......... 37 Due diligence............................. 22 Mibanco ................. 35 Social Stock Exchange London .... 22 Hybrid capital ..................... 27 ASN-Novib Fund .................. 37 Auridis ................................................................................ 47 Screening .. 31 Impact Investment Exchange Asia ............................. 22 Convivatus Social Capital .............. 27 avant-gardist . 46 Banca Popolare Etica...................... 19 Social Venture Fund ..................................................................................................... 31 Ford Foundation ............................................................ 21 Ferd Social Entrepreneurs ........................................................................................................................................................... 47 Triodos Bank ........ 22 Dexia Microcredit Fund ............................. 39 OneCalifornia Bank ............. 22 REDF .............................................................................. 28 Brac Bank .............................................................. 27 Alternative Bank Schweiz ................................. 32 Internal financing ............... 11 EH Foundation ................................. 19 Vancity..........b foundation................................................ 22 Robin Hood...................... 49 Impetus Trust............. 43 NExt SSE .... 41 Children’s Investment Fund Foundation ........................................... 22 Funding consultancies ............................................................................................................................................... 38 Omidyar-Tufts Microfinance Fund................ 42 d...................................................................................................................................................... 47 Social investment advisors ....................................... 29 Core Innovation Capital ....................................... 32 Light Years IP ...................................................... 29 Cultura Bank ..................................................................................... 28 Charity Bank ......6 Index
Acumen Fund ...................................................................................... 34 responsAbility ............ 32 Inspiring Scotland ............................................ 21 LGT Venture Philanthropy .............................................................. 35 Task force members......................................................................................................................... 49 noaber Foundation ..................................................................... 13 New Philanthropy Capital.................... 42 Mezzanine capital ............... 39 Revenue share agreements ....................... 41 CAF Venturesome ..................................................................... 28 Convertible grants ...................... 44 Value banks ............... 16 PHINEO......................... 37 Dual Return Fund .......................................... 31 Forgivable loans .................... 23 Fondation Demeter ........... 48 new resource bank ........................................ 40 Banco Sol ............ 19 Social Investors Club ........ 44 Venture philanthropy funds ......... 6 Social Finance... 48 PhiTrust ........................................................................................................................................ 30 Equity capital............
evpa. (2004): Double Bottom Line Project Report: Assessing Social Impact in Double Line Ventures. C.uk/skoll.The Evolution of High Engagement Philanthropy in Europe'. (2010) 'Reporting im Social Entrepreneurship'. (2011) 'Finanzierung von Social Enterprises – Neue Herausforderungen für die Finanzmärkte'. interviews with Schwab Fellows and the following literature: Achleitner. A. S. & Tappeiner.-K. A. Download: www. VS Verlag. Spiess-Knafl. Wiesbaden. F. Gabler Verlag. (Ed. Tokarski & Ernst (Ed.com/sol3/papers. S. Download: http://papers. Achleitner. Achleitner. / Rosenzweig.7 Sources
The content is based on a survey of Schwab Fellows conducted in December 2010.schwabfound. (2008) 'Private Equity in Familienunternehmen: Erfahrungen mit Minderheitsbeteiligungen'. Websites used for a general overview were:
European Venture Philanthropy Association (EVPA) Global Alliance for Banking on Values (GABV) Schwab Foundation for Social Entrepreneurship
www. / Long. (in press) 'Financing of Social Entrepreneurship' in Volkmann. D.eu. Gabler Verlag. in Hackenberg and Empter (Ed.cfm?abstract_id=1117903. A.-K. John.org www.org
..).. E.-K.) Sozialunternehmern.gabv. R.ox. (2006) 'Venture Philanthropy . B. & Volk. Social Entrepreneurship . / Olsen. & Spiess-Knafl. Stuttgart: Schäffer-Poeschel. Clark. W. W. Wiesbaden
Most websites were cited in the text. Heister. R.-K. Konzepte zur finanziellen Entrepreneurs'.com www.sbs. Schraml. Pöllath.).. W. Roder. & Stahl. (2007): 'Finanzierung von Unterstützung von Social
Achleitner.Social Busines.ssrn. (2010) 'Finanzierung von Social Entrepreneurship durch Venture Philanthropy und Social Venture Capital'. Understanding Social Entrepreneurship & Social Business Be Part of Something Big. S. P.ac. Wiesbaden. A.