Social Finance 101: A Beginner's Guide

In an era where the pursuit of profit intersects with the desire to create positive change, social finance has emerged as a powerful tool for mobilizing private capital to achieve social and environmental goals. Social finance aims to harness the power of finance to generate both a social dividend and an economic return, paving the way for sustainable and impactful investments.?

At Common Good Solutions we are passionate about social finance and the opportunities it offers not-for-profit organizations in Atlantic Canada and beyond. So what is social finance and how can it benefit my organization? Keep reading to find out!

What is social finance?

At its core, social finance is an approach to deploying capital in ways that deliver measurable social and environmental benefits alongside financial returns. To move the dial on it, the federal government recently launched a $755 million Social Finance Fund. Unlike traditional finance, which prioritizes profit maximization, social finance seeks to address pressing social and environmental challenges while generating positive financial outcomes. By aligning financial incentives with social objectives, social finance creates a win-win scenario for investors, communities, and society.

As non-profits grow, one tool that they can utilize to diversify revenue streams is starting a social enterprise that can generate income while addressing their overarching social mission. This approach ensures financial resilience while allowing non-profits to stay true to their core mission of creating impact. Some examples of social enterprises would include starting a cafe for employment generation, selling products made by local communities, and creating an upcycling workshop, among many others.?

The popularity of social purpose organizations continues to grow, and so does the opportunity for social finance for organizations that prioritize social or environmental impact alongside financial sustainability. One of the challenges for organizations with dual missions of addressing societal challenges while sustaining their financial viability is being able to get capital to scale their operations and impact. Social Finance is an emerging solution to fuel the change in the business landscape and?social impact sector.

Social finance also offers the opportunity for community bonds which offer Non-Profit Organizations (NPOs) the opportunity to raise funds locally for initiatives like renewable energy installations or affordable housing developments. By engaging community members as investors, Non-profits or charities can foster local ownership and drive positive change. The renowned Centre for Social Innovation launched the first community bond campaign in 2010 and used community trust to invest in a building to house social innovators in Ontario.

Conclusion

In conclusion, social finance is about harnessing finance's power to create a better world for generations to come. So, let’s shape Social Finance for our region together because, after all, the future of Atlantic Canada isn't written in stone—it's waiting to be shaped by the hands of those who dare to dream and do.

Learn more about social finance in Atlantic Canada and how to get involved here.