What is social investment?

A picture of two workers from Buchan Dial-A-Community Bus, a SIS customer and social enterprise

Social investment, unlike grants or donations, is when charitable organisations such as social enterprises receive a loan which they later repay. Loans are used in a variety of ways, from buying equipment, to renting property, to expanding or replicating the business in some way.

One example of this is social enterprise Social Bite who, having successfully opened eateries in Edinburgh and Glasgow received SIS investment to open another outlet in Aberdeen.

Our investments create significant social impact, which you can see in our Social Impact Report 2016. For examples of social enterprises and community groups that have benefitted from SIS loans, visit our customer stories page.

Who provides social investment?

It can be difficult for charities and social enteprises to obtain loans from mainstream banks. Social investment funds provided by organisations such as Social Investment Scotland have helped to fill this void to support growth in charities, community organisations and social enterprises. SIS is the largest investor of its type in Scotland and is a social enterprise in its own right, however operates in partnership with a range of organisations who also have an interest in this field.

What does social investment look like?

Social Investment is an emerging area of interest in the UK with many new and innovative models being developed. Investment aims to increase the sustainability and support the growth to enhance the impact of a charity, community group or social enterprise. In its simplest form it may be a basic loan however more innovative models of financing are being developed. Social investments look for a social return rather than just a financial return like an interest rate.

What makes a good social investment?

Essentially one that maximises it's impact - be that economic, social or environmental - and in a sustainable way. A range of different tools are used by organisations to demonstrate and measure impact and investors may be most attracted to those investments that offer the greatest impact.

Is this a new idea?

Although social investment is now attracting interest from a range of different bodies and governments, it is a well established concept and has developed in tandem with the growth of more enterprising third sector organisations. The marketplace in Scotland is made up of a range of organisations including philanthropists, charitable trusts, ethical banking groups and Government.

Social Investment - Step by Step