Social business investors are paid back

Social business investors can be in the form of social entrepreneurs, corporate organisations (through CSR initiatives), philanthropists, financial institutions including banks and even the Government.

They invest in social businesses to get both a social and a financial return on their investment.

The social return is gained through investing in a social business that is striving to address social or environmental issues that the investor has a interest or concern about.

The financial return is realised through being repaid their investment at market rates.

It is important that the investment is repaid for three primary reasons:

1. The investment can be reused to address other social issues

2. The investors don't get equity in return for their investment, because they don't own the social business

3. The social business operates with commercial business principles and doesn't focus on a donation mentality.

Paying back the investment at market rates means the social business can widen the net of investors to commercial banks and other institutions that are focused primarily on the financial return. This can provide quicker access to funds, and in some cases at better interest rates.


Mike.