Social Investment Manual PDF

Social Investment Manual
A Guide for Social Entrepreneurs
Developed by the
Social Investment Task Force
consisting of
Technical University Schwab Foundation Schwab Foundation for
Munich Community of Social Social Entrepreneurship
Entrepreneurs*
Ann-Kristin Achleitner led by Mirjam Schöning

Wolfgang Spiess-Knafl Andreas Heinecke Abigail Noble
WORKING
DOCUMENT
Posted: 18 May 2011

Last Revised: 20 June 2011
The Social Investment Manual will be revised regularly and the most recent version can be found at
http://www.schwabfound.org/pdf/schwabfound/SocialInvestmentManual.pdf.
* Please see page 52 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 wolfgang.spiess-knafl@wi.tum.de and

abigail.noble@schwabfound.org
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.
1
Table of Contents
Foreword 3
1 Introduction 5
2 Social Investment Landscape 6
3 The Financing Process 7
3.1 Available Financing Instruments 7
3.2 Finding the Right Investor 9
3.3 Approaching the Social Investor 10
3.4 Screening and Due Diligence Process 11
3.5 Negotiating the Financing Terms 13
3.6 Working with Investors 15
3.7 Performance Measurement 16
3.8 Exit Consideration 18
4 Appendix 19
4.1 Social Capital Markets 19
4.2 Internal and External Financing 21
4.3 Financing Instruments 22
4.4 Reporting Template 24
4.5 Investment Template 25
4.6 Social Investors with General Investment Focus 27
4.7 Social Investors with Focus on Microfinance 39
4.8 Value Banks 43
4.9 Social Investment Advisory 48
4.10 Funding Consultancies 50
4.11 Social Stock Exchanges 51
5 Task Force Members 52
6 Index 54
7 Sources 55
2
Foreword
The basis for this manual was laid at a Schwab Foundation for Social Entrepreneurship
gathering during the World Economic Forum‘s Annual Meeting of New Champions in
Tianjin (China) in September 2010. The Schwab Foundation for Social Entrepreneurship
comprises of nearly 200 of the world`s leading social entrepreneurs, who represent the voice
of social innovation of the World Economic Forum.
Thirty social entrepreneurs in the Schwab Foundation community came together in Tiajin in
September 2010 from around the world to share their current challenges and to discuss how
these challenges could be addressed together. Subsequently, several task forces were formed
by Schwab Foundation social entrepreneurs to address these common challenges. The task
force on social investment quickly caught the interest of further members within the Schwab
Foundation community.
The Schwab Foundation recognizes social enterprises span the spectrum of financial models,
including grant based organizations to revenue generating organizations, which can not only
be financially self-sustainable but also can be 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 social entrepreneurs within the Schwab
Foundation community (70%) either has a hybrid non-profit or a social business model.
Social enterprises with these two business models benefit from pursuing different debt and
equity structures to expand their impact, and are the primary audience of this manual.
The entrepreneurs who participated in the social investment task force had varied and often
extensive experience with social investors. Some had conducted long negotiations with social
entrepreneurs, learning through trial and error about how best to work with social investors.
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 social investors to exchange experiences, few, there was
little knowledge-sharing among social entrepreneurs. The task force set out to reconcile this
through the creation of this manual.
Social investment can offer entrepreneurs the chance to scale up their impact tremendously,
but it can also lead to unintended consequences, such as a change in strategic direction, a
divergence from the original values and mission of the enterprise, a distancing from direct
engagement with the community it is serving, or a loss of control over the organizational
culture. Given this, the need for a manual is ever more important for social entrepreneurs.
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.
It is our hope that social entrepreneurs will embrace both the challenges and opportunities
represented by the social investment space, and will use this guide as a launching point.
Given the rapid evolution of this field, the task force welcomes continuous feedback and
insights from entrepreneurs to incorporate in the guidebook.
3
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 Professor Ann-
Kristin 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
4
1 Introduction
Philanthropic donations were the major, if not the only source of funds for a growing social
enterprise. As the field of social enterprise has gained credibility and therefore scale, funding
sources that can ensure not only the financial sustainability but also the growth in impact of
social enterprises have increased both in terms of number of funders and size of financing.
Social Investment, as this form of financing is often called, represents a real alternative to
government subsidies or donations. 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.
Paradoxically, while successful social entrepreneurs with proven track records face a chronic
lack of capital, investors seeking to make both a financial and social return often feel the
options are limited. However, it is not a simple market inefficiency or matching problem that
must be solved. Most often this is because the skills and expertise required to achieve the
objective are not understood. The best of intentions on both sides cannot prevent deals from
failing.
The authors of this manual believe the problem is one of information and understanding. First,
better understanding of the social investment space is needed on both ends. Second, rigorous
and mutually agreed upon metrics that will facilitate the social investment transactions and
deal flow are imperative.
Social entrepreneurs complain that there is little understanding of the definition of ―social
impact‖ and there is often financial over-engineering. The duration of expression of interest
until the conclusion of an investment agreement is inordinately long, sometimes running in
years, and investors in this sector often lack on-ground knowledge. Two completely different
worlds collide — one where planning and structure is all-important and one where there is
apparently a lack of management expertise, vague and uncertain planning perspectives, and
often, a lack of regular cash flow.
This manual strives to address this challenge. This document is by no means a scientific
treatise on social investment, nor is it an abstract idea. It is written from the perspective of
social entrepreneurs, to help them engage better with those who deal with social investment
support, to help shorten times to assess expectations and prepare a mutually relevant frame.
Social entrepreneurs have already sought out to address the most pressing problems facing
societies today. The goal of this manual is to alleviate an additional challenge on the hands of
the social entrepreneurs, that of having a mutually compatible approach for social
entrepreneurs and social investors.
5
2 Social Investment Landscape
There has been an increased effort in recent years by social entrepreneurs to overcome the
challenges of the traditional donation-based philanthropy model through social investment
opportunities. To facilitate this, institutions comparable to traditional capital market
institutions have been set up in the social sector to reduce the transaction costs and to help
allocate capital more efficiently. The institutions in the social sector and their equivalent in
the traditional capital markets are shown in the following figure.
Figure 1 Social Capital Markets
Source: Achleitner & Spiess-Knafl (in press)

Each institution focuses on a specific segment of the social sector. For example, value banks
provide loans to social enterprises with a low risk profile to minimize the default rate,
ensuring the deposits of its savers. Social stock exchanges could pose an attractive funding
source for mature social enterprises with proven business models and significant capital
needs. Venture philanthropy funds provide capital for younger and more innovative
enterprises.
In addition to the above financing institutions, there are also institutions which advise social
enterprises and funders on how to structure an investment. Please see appendix on page 19 for
an overview of this sector.
6
3 The Financing Process
The complete financing process includes the following steps:
- Finding the appropriate financing instrument
- Finding the right social investor
- Approaching the social investor
- Screening and due diligence process
- Negotiating the financing 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 then which social investors support the strategy and
social mission of the social enterprise.
3.1 Available Financing Instruments
When determining the right financing instrument, social entrepreneurs should ask themselves
the following questions (see also Figure 2 below):
- Can we set aside capital that would allow us to repay in a few years any financing
received?
- In thinking about ways our organization might grow, can we take on capital that
requires annual interest or dividend payments (e.g. 5% interest) through-out the course
of the financing?
Figure 2 Classification of available financing instruments
Illustration based on Achleitner, Spiess-Knafl & Volk (2011)

Those financing instruments are described in the following table as well as in more detail in
chapter 4.3.
7
Financing Instrument Term Sheet Implications for Social Enterprise
Duration: Short term

- Usually restricted use for predefined projects
Grants Annual Payments: None - High fundraising costs
Repayment: None - Low entrepreneurial flexibility
Duration: Long term (3-7 years) - Annual interest payments require predictable cash flows
Debt Capital Annual Payments: Interest payments (variable) - No dilution of ownership
- Far-reaching rights of capital providers in case of default
Repayment: Yes - High entrepreneurial flexibility in the use of capital
Duration: Unlimited - Dilution of ownership

Equity Capital Annual Payments: Dividend payments (variable) - Social investor receives control and voting rights
- Profit participation for social investor
Repayment: No - Potential impact on corporate culture
Duration: Long term (3-7 years) - Annual interest payments require predictable cash flows
Mezzanine Capital Annual Payments: Interest payments (variable) - No dilution of ownership
- Mandatory repayment
Repayment: Yes - Profit participation for social investor
Duration: Long term (3-7 years) - Inexpensive financing instrument

Annual Payments: None - No dilution of ownership
Hybrid Capital
- Risk sharing with the social investor
Repayment: Depends upon structure - Great structuring flexibility
Table 1: Comparison of Financing Instruments
Source: Own illustration
8
3.2 Finding the Right Investor
When determining whether a prospective investor is the right fit for your social enterprise, the
social entrepreneur should consider both formal and informal criteria. The questions in the
below figure are designed to help the social entrepreneur make the decision on whether the
social investor is the right fit.
Figure 3 Investment fit
Source: Own illustration
Many social investors concentrate their funding on a particular sector or geographic region,
thereby deepening their expertise and allowing them to transfer knowledge among the social
enterprises. For this reason, the geographic focus and the sector focus tend to be important on
the part of the investor, and are usually strict criteria.
However, the financing terms and the investment stage do offer room for negotiation. In the
case of significant capital needs exceeding a limit of ~$1.000.000 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
Investors tend to be focused on a specific investment stage, making it difficult to come to an
agreement when the social enterprise is at a different business model stage than the social
investor`s usual focus. A social investor might only finance a proven business model while
others finance individuals with a promising concept for a social enterprise. This ―proof of
concept‖ is usually not negotiable.
The social entrepreneur also has to consider if the social investor shares the same values and
has a similar mission. During the first meeting with the social investor or a discussion with
other investees, this can be gauged.
9
3.3 Approaching the Social Investor
Social investors screen and analyze as many social investment opportunities as possible, in
order to find the best investment prospect. For this reason, it is easy to make initial contact
with investors and their websites offer information on how to contact the fund managers.
Box 01
Acumen Fund has a link on its website “Business Plan Submission” with all
relevant information. On this page Acumen Fund describes the formal criteria
such as:
- Geography
- Sector
- Size
- Stage
If the social entrepreneur meets these criteria he is asked to send his business
plan to businessplans@acumenfund.org addressing the following topics:
- What is the primary product or service you provide?
- Tell us about your team, mission, and goals. How are you uniquely
qualified and positioned to take on this endeavor?
- Tell us about your experience and knowledge working with the market
that you'd like to serve. What have your experiences been in testing your
product in the target market and how has this positioned you to grow
from here?
- How is the product or service relevant to impacting the lives of the base of
the pyramid?
- Many well-intentioned ideas to help the poor are not sustainable and do
not appropriately address market barriers to success. 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 way to meet social investors is through social investment conferences. In addition to
meeting the investors, social entrepreneurs can also speak with other investees of the social
investor or social investment advisors which can provide a good overview of the activities of
the different social investors.1
In the appendix on page 25 there is an investment template on how to prepare the relevant
information. This template structures the relevant information and reduces the time spent for
further inquiries.
1
Also see page 45 for a list of social investment advisors.
10
3.4 Screening and Due Diligence Process
Social investors may analyze several hundred social enterprises per year and use a multi-stage
selection process through which only a few make it to the final rounds. Within this selection
process, fund managers discuss around 50 different selection criteria. According to Heister
(2010) the criteria 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. Investors want to understand whether the product or
service provided will change the relevant sector and help the target group. Relevant questions
could include aspects such as access to the target group, empowerment strategies, stakeholder
support or innovation.
―Market‖ discusses the competition and peers of the social enterprise as well as the
characteristics of the target group. For this, fund managers want to understand the potential
market size to better evaluate future growth strategies and therefore investment .
―Financials‖ is highly relevant for funds which expect interest payments and/or a future
repayment. Fund managers analyze the business model as well as capital requirements in
order to understand how and how much income will be generated during the holding period.
―Social Impact‖ refers to both the scalability and reach of the business model. Reach is the
percentage of the market covered with the ―concept‖. 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 discuss different aspects of the ―Social Entrepreneur‖. The aspects can be
generally divided into five groups which are strategic skills, professional skills, creativity,
attitude and development potential. Important to the overall assessment of the social
entrepreneur are his or her commitment to the concept, creativeness in achieving the social
impact or reaching the market, and previous track record of success.
A sample of questions to prepare is shown in the following box.
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Box 02
For the due diligence process social entrepreneurs should prepare the
following 20 questions:
1. Is it a new concept?
2. Are there existing or competing offers for the target group?
3. What is the difference to other concepts and offers?
4. Does the organization have a clear strategy to solve the social
problem?
5. Can the target group be defined and does it have an incentive to
accept the offer?
6. Does the concept focuses on the strengths of the target group (e.g.
special abilities of autists)?
7. Does the concept integrate the target group in the process of the
service provision?
8. Are other stakeholders integrated in the concept (e.g. parents,
teachers or neighbors)?
9. Does the concept use externals and multipliers for the service
provision?
10. Can the target group easily access the offer (low-threshold offer)?
11. Does the concept aim to change the system?
12. Can the concept be copied and scaled easily?
13. What is the potential reach of the concept?
14. Is the offer dependent on the skills, experience and contacts of the
founder?
15. What were the motives of the foundation?
16. Is the founder resilient?
17. Has the founder good communication skills?
18. Has the founder already gained entrepreneurial experience?
19. Is the founder able to delegate duties?
20. Is the founder creative in solving problems?
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3.5 Negotiating the Financing Terms
Once the due diligence finishes positively, the social investor and the social entrepreneur can
start the negotiations of the financing terms. In some cases the social investor provides the
financing in separate tranches after the completion of certain milestones (e.g. $250.000 at the
start and $250.000 after setting up a second location). The financing terms differ between debt
capital (loan) and equity capital (ownership stake).
Equity capital
An equity investment gives the social investor a share of the company and the future profits.
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
In the case of equity investments, the valuation of the social enterprise is key, and whether the
investment is based on nominal or market values. In the case of nominal values, the
repayment should also be based on nominal values.2
Social investors and social entrepreneurs should discuss what kind of financial return they can
expect. The financial return can be realized through an increase of the value of the social
enterprise as well as through dividend payments.
In addition, the social entrepreneur should address the issue of control and voting rights.
While the investor should be able to influence decisions in the company, the social
entrepreneur should maintain the necessary rights for flexible and entrepreneurial decision-
making authority for the social enterprise.
Lastly, social entrepreneurs and social investors should discuss the potential options for the
investors future exit strategy (see more details on page 18).
Debt capital (loan)

A loan is attractive if the social enterprise has access to stable and predictable cash flows. 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
interest rate can range from interest-free (e.g 0%) to market rate return (e.g. about 7% in
Western Europe) and depends upon the financial return expectations of the social investor.
2
In one example the social investor has taken up 10% of the social enterprise at nominal value and also provided a loan. In such cases it is
important that the social entrepreneur can buy back the 10% of the equity at nominal value.
13
In some cases, the social entrepreneur must plan for both interest payments during the term of
the loan and the loan repayment after the loan term has ended. In a popular model the social
entrepreneur starts to repay the loan (the principal) after two years. Another option is the
complete refinancing at the end of the loan period.
The social enterprise should also negotiate the interest payment and principal repayment
schedule in case of distress to secure the necessary financial flexibility. Grace periods can be
an attractive option for social enterprises.
However, the social entrepreneur must consider the worst-case scenario. In the case of default
or bankruptcy, the loan provider`s rights to be repaid might take precedence over the social
entrepreneurs rights. For this reason, the social entrepreneur should avoid taking on personal
liabilities for the social enterprise or negotiating extensive debt to equity swaps in case of
default. 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.
Box 03
The dos and don’ts of negotiating the financing terms:
- Avoid any personal liability.
- Consider the consequences in case of default.
- Secure the necessary entrepreneurial flexibility for the operations (voting
rights only as far as necessary).
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3.6 Working with Investors
After working out the details of the investment deal, the social entrepreneur would be wise to
set up a working relationship with the social investor. Creating an advisory board is both a
practical way to involve the social investor in the operations and to give the social investor
voting and control rights (e.g. one social enterprise sends a monthly overview of the financial
situation to the members of the advisory board which convenes four times every year).
The members of the advisory board usually include representatives of the social enterprise,
representatives of the shareholders as well as independent experts which can either contribute
expertise from the social or the business sector.
The advisory board can strengthen the quality of the entrepreneurial decisions and the
accountability of the management by asking tough questions about current practices and
suggesting new policies, procedures or approaches. Social investors tend to have extensive
knowledge about corporate governance, reporting, controlling and corporate finance but have
limited knowledge of the core activities of the company such as delivering the social services
to the target group. For this reason, the social entrepreneur should adjust his or her
expectations and use the existing skill sets and network of the social investor.
In some cases, the set-up of an advisory board is not recommendable. Some social enterprises
have operations across countries with different funders, each of which work in different
settings. In those cases an advisory board on a company level would be difficult to manage
due to the complexity of the relationships. Therefore, a close personal interaction would be a
better alternative.
As it is described in Box 04, a very important element is the inter-personal relationship
between investee and investor. Given the many potential conflicts around alignment of the
social mission, profit distribution and future development of the enterprise, the social
entrepreneur should first be certain that he or she wants to have the social investor as thought
partner before including him or her into a key decision–making role.
Box 04
Achleitner et al. (2008) conducted a study on minority investments of private equity
funds in family firms. Similar to social enterprises, family firms also have multiple
goals. Some of the key findings were:
- Family firms always install an advisory board (if not existing already) after
the investment. Interestingly, the advisory board was kept in place even after
the exit of the investor.
- The management particularly appreciates the role of the advisory board as
sparring partner.
- The family firms benefit from the investors’ support in corporate governance,
controlling, reporting and corporate finance.
- A clear common understanding concerning the profit distribution is
necessary to minimize the risk of conflicts of interest.
- The inter-personal relationship between investor and family firm is the single
most selection criterion for the family firm in finding the right investor.
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3.7 Performance Measurement
Performance measurement enables the social investor to control and monitor the work of the
social entrepreneur. Social entrepreneurs need to consider their ―impact value chain‖ first.
The main questions are shown in the following figure.
Figure 4 Impact Value Chain
Illustration based on Clark et al. (2004) and Roder (2010)
Input are those ressources which are put directly into the venture (e.g. assets, volunteering or
money). Clark et al. (2004) and Roder (2010) have described outputs and outcomes as
follows:
“The key notion of the Impact Value Chain is to differentiate outputs from
outcomes.Outputs are results that a company, nonprofit or project manager can measure
or assess directly. Outputs for an after-school program, for example, could include the
number of children participating in the program, the percent that drop out, and the
percent that re-enroll the following year.
Outcomes are the ultimate changes that one is trying to make in the world. For the after-
school program, desired outcomes could include higher self-esteem for participants or
higher educational achievement for participants. Commonly the organization running the
program may not have the expertise or resources to evaluate whether an outcome has
been achieved, 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.”
Although the impact value chain is a clear concept, there is not yet a performance
measurement method which is globally accepted and applicable. (A catalog describing the
methods to assess the social impact can be found at www.riseproject.org/
DBL_Methods_Catalog.pdf.)
16
Performance measurement methods have similar information requirements as financial
analysis that assesses the valuation or the credit rating of a company. Those methods require
solid and comparable information. 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.
Standards addressing the characteristics of social enterprises have been developed. Yet there
is no globally accepted standard. (Two popular standards: The Social Reporting Standard
(SRS) developed in Germany can be seen at www.social-reporting-standard.de. The Impact
Reporting & Investment Standards (IRIS) developed in the United States is described in Box
05).
From the social entrepreneur‘s perspective, reporting requires at first additional efforts and
costs, yet generates long term benefits. It allows the social entrepreneur to track results, to
improve processes and to have a better documentation of the successes of the social
enterprise.
Box 05
The Impact Reporting & Investment Standards (IRIS) was founded by Acumen Fund,
B Lab and Rockefeller Foundation to create a common framework for defining and
reporting the performance of impact capital. The IRIS framework consists of six
parts:
- Organization description (indicators that focus on the organization’s mission,
operational model, and location)
- Product description (indicators that describe the organization’s products and
services and target markets)
- Financial performance (commonly reported financial indicators)
- Operational impact (indicators that describe the organization’s policies,
employees, and environmental performance)
- Product impact (indicators that describe the performance and reach of the
organization's products and services)
- Glossary (definitions for common terms that are referenced in the indicators)
(taken from http://iris.thegiin.org/iris-standards)
In the appendix on page 24, there is a reporting template which can be used for the reporting
to the social investor.
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3.8 Exit Consideration
In the chapter Negotiating the Financing Terms a few aspects related to exit considerations
were discussed. The exit routes for equity capital, debt capital, and grant funding are shown in
the following figure.
Figure 5 Exit considerations
Illustration based on Achleitner & Spiess-Knafl (in press)
In the case of equity capital, there are several exit strategies. There can be a sale of the shares
to a third party investor, the social entrepreneur can buy back equity from the investor, the
parties can issue an initial public offering on a social stock exchange or can liquidate the
ownership. The buy-back arrangement implies that the social entrepreneur has sufficient
funds to buy back the share of the social investor.
In the case of debt capital, social entrepreneurs can either repay the loan or refinance the loan.
If the social entrepreneur pursues refinancing, the same or another social investor must be
willing to finance the social investor for the next period. If the social enterprise defaults on the
loan (e.g. non-repayment of the loan or long-term delay on scheduled payments), there are
three scenarios:
- Social investor institutes bankruptcy proceedings to recover part of the loan
(―liquidation‖).
- Social investor extends the period of the repayment schedule (―financial flexibility‖).
- Social investor accepts equity in exchange for the loan (―debt to equity swap‖).
Grant funding also presents several exit considerations. A social investor can fund 10% of the
total budget or take over part of the overhead costs for a given period of time. After this time,
the social enterprise either needs to secure follow-up financing or should have reached
financial self-sustainability.
18
4 Appendix
4.1 Social Capital Markets
Value Banks
Value banks have the same role as commercial banks in traditional capital markets. They take
deposits from savers and give loans to individuals and companies. Since Value Banks focus
on the social sector, they have a better understanding of the business models and the specific
needs and requirements of social enterprises. In addition, the savers sometimes accept a lower
interest rate which can be passed on to the social enterprise. An overview of those specialized
loan providers can be found in chapter 6.5 ‖Value Banks‖ on page 42.
Social Investment Advisors

The traditional role of investment banks is the financial advisory of corporate clients and the
matching of supply and demand. Social investment advisors take over the same role in the
social sector. They support the social enterprise in setting up an appropriate financing
structure and finding the right investors. A list of social investment advisors can be found in
chapter 4.9 ‖Social Investment Advisory‖ on page 48.
Social Stock Exchanges

A stock exchange is an efficient public platform to match supply and demand. On stock
exchanges companies can issues shares or bonds which are then traded continuously.
Companies have access to a large capital pool and investors can sell their shares or bonds
without delay at any time. A social stock exchange can be an attractive financing option for
social enterprises with a proven business model and significant financing needs. At the
moment, three social stock exchanges with trading activities are being incorporated.3 An
overview of social stock exchanges can be found in chapter 4.11 ―Social Stock Exchanges‖ on
page 51.
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. This approach reduces the
transaction costs and the risk through diversification effects. Social investment funds apply
the same principle in the social sector. They collect funds from individuals or foundations
which they invest in a given sector such as microfinance or the solar industry.
Venture Philanthropy Funds

Over the last 15 years high-net worth individuals and foundations have started to rethink their
funding strategies. They began to adopt venture capital techniques for their funding strategies.
This new form of financing in the social sector is known as Venture Philanthropy, High
Engagement Philanthropy or Social Venture Capital
John (2006) defines this approach as having the following characteristics:
3
Due to strict regulatory requirements it is not yet clear if and when the first social stock exchange will start trading.
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- High engagement
- Tailored financing
- Multi-year support
- Non-financial support
- Organisational capacity-building
- Performance measurement
Thus, social investors concentrate their funding and support only a limited number of social
enterprises. Therefore, they can support the social enterprise over a longer period of time and
use tailored financing (also including grant funding). Venture Philanthropy funds also support
the social enterprise on a non-financial basis with management consulting or pro-bono
services.
Due to their similarities, social investment funds and venture philanthropy funds are shown in
the same overview. An overview of the social investors can be found in chapter 4.6 "Social
Investors with General Investment Focus‖ on page 27 as well as chapter 4.7 ―Social Investors
with Focus on Microfinance‖ on page 39.
Funding Consultancies
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 play this role. They publish research reports on different sectors and
advise funders on which organizations to support. An overview of those consultancies can be
found in chapter ―Funding Consultancies‖ on page 50.
20
4.2 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. The service is either paid by the target group, third-party beneficiaries or
public authorities.
External financing is either used to cover negative operating cash flows or to finance long-
term investments such as buildings, equipment or infrastructure.
The different financing sources and instruments are shown in the following figure.
Figure 6 Classification of the financing structure
Source: Achleitner, Spiess-Knafl & Volk (2011)
21
4.3 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).
Grants are usually provided by foundations or individuals and continue to be an important
funding source for social enterprises.
Despite their importance, there are some shortcomings related to grants. Grants are regularly
provided only for certain projects and usually exclude overhead costs and expenditures for the
development of the social enterprise. Furthermore, grants are usually short-term oriented, not
predictable and impose high fundraising costs on the social enterprises.
Equity Capital
Equity capital is the financing instrument with the highest risk for the investor. The social
investors gives the social enterprise a certain sum in exchange for a share of the company
(e.g. 10% of total shareholdings). The social investor receives no regular annual payments but
a share of the profits generated by the social enterprise. Besides a share of the future profits,
the social investor has certain control and voting rights. Control and voting rights depend
upon the legal form of the enterprise and are usually structured in the contract between
investor and investee.
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. 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. Normally, the
loans are provided for 5 - 7 years.
Mezzanine Capital
Mezzanine capital combines elements of debt and equity capital and represents a convenient
financing alternative if pure equity or debt capital is not applicable. The interest payment can
be linked to the profits of the company whereas the total amount is repaid after a certain time
period. The structuring flexibility makes mezzanine capital an attractive option for social
entrepreneurs as well as social investors.
Hybrid Capital
As illustrated in figure 4, hybrid capital contains elements of grants, equity and debt capital.
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
A recoverable grant is a loan which must be paid back only if the project reaches certain
previously defined milestones. If the milestones are not reached the recoverable grant is
converted into a grant. This mechanism can be used if success of the project enables the social
enterprise to repay the loan to the social investor.
A forgivable loan is a loan which is converted into a grant 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.
A convertible grant is another financing instrument with hybrid capital character. The social
investor provides the enterprise with a grant which is converted into equity in the case of
success.
Revenue share agreements are financing instruments where the investor finances a project and
receives a share of the future revenues. This risk sharing model can be used for the repayment
of the financing and gives the social enterprises financial flexibility.
Figure 7 Financing instruments
Source: Achleitner, Spiess-Knafl & Volk (2011)
23
4.4 Reporting Template
Name of the Organization: [add the name of the organization] dd/mm/yyyy
1. Profit & Loss (€)
Half Year ended Revised annual budget
Sales ____ ____

EBIT ____ ____
Net Income ____ ____
Costs ____ ____
2. 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. Activity development over the period
[add information on the key developments of the last reporting period]
4. Favorable development over the period (strengths)
[add information of the successes and the areas which developed favorably]
5. Unfavorable development over the period (weaknesses)
[add information of the failures and the areas which developed unfavorably]
6. Comments and additional information on the social impact figures
[add information about the development of the social impact figures]
7. Reasons if the annual budget has been amended
[add information why the budget has been changed over the reporting period]
8. Key targets for the next Half Year
[add information on the key targets for the next reporting period]
24
4.5 Investment Template
Name of the Organization: [add the name of the organization]
1. Information about the Founder
[add information about the founder and the idea that led to the foundation]
2. Business Model
[add information about the business model including access to the target group and
description of the target group]
3. Year of Foundation
The organization was established in ______. The headquarter is based in ______
4. Number of Employees
______ employees
5. Streams of Revenues (including donations and governmental money) of the past 3 years
2008: US$ ______

2009: US$ ______
2010: US$ ______
6. 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]
25
6. Governance Structure
Board of Directors / Advisory Board
______ ______, Chairman, role outside of social enterprise

______ ______, role outside of social enterprise
______ ______, role outside of social enteprise
Management
______ ______, Executive Director

______ ______, role within social enterprise
______ ______, role within social enterprise
7. Reporting System
[add information on the specific reporting system you are using. 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.]
8. Grants and Awards
[add information on the grants and awards the social enterprise has received in the past]
9. Requested Amount of Money
US$ ___
10. Use of Capital
[add information on how the capital will be used]
11. Type of Investment you request (Loan or Equity)
______________
26
4.6 Social Investors with General Investment Focus
Main Financing Geographical

Social Investor with short Mission Statement Main Sector focus Contact Details
Instruments Focus
Acumen Fund
- Debt capital
- Water 76 Ninth Avenue, Suite 315
Acumen Fund is a non-profit global venture fund - Equity capital
East Africa - Health New York, NY 10011
that uses entrepreneurial approaches to solve the - Guarantees
India - Agriculture United States of America
problems of global poverty. Small amounts of - ―Lab Investments‖
Pakistan - Energy +1 212 566-8821
philanthropic capital, combined with large doses of (experimental
- Housing mtada@acumenfund.org
business acumen, can build thriving enterprises investments)
www.acumenfund.org
that serve vast numbers of the poor.
AlphaMundi Group
- Microfinance
Augustinergasse 21
AlphaMundi is a Swiss commercial enterprise - Sustainable agriculture
- Debt capital CH-8001 Zurich
with a social mission. Our mission is to help Latin America - Renewable energy
- Equity capital +41 44 5080 556
achieve significant and self-sustaining poverty - Rural development
info@alphamundi.ch
reduction and environmental preservation in - Education
www.alphamundi.ch
developing countries.
Artha Initiative
Leconfield House,
The Artha program strives to support high impact - Agriculture Curzon Street, Third Floor
- Equity capital - Cleantech London W1J 5JA
sustainable enterprises that are validating the India
- Convertible grant - Livelihoods United Kingdom
market niche for providing goods and services to
the ‗bottom of the pyramid‘ in India, with an - Water +44 20 7016 4300
emphasis on agriculture, energy and livelihoods. anna.mustoe@riantacapital.com
www.arthaplatform.com
27
Instruments Focus
Auridis
German-speaking
Gruenstrasse 18
- Debt capital countries and - Support of young
41460 Neuss
Auridis invests globally in endeavours, which - Interest-free loans some children from socially-
Germany
sustainably improve the life opportunities for - Grants international disadvantaged families
+49 2131 1511842
socially disadvantaged children. activities
info@auridis.de
BonVenture
- Children, young people
Pettenkoferstrasse 37
BonVenture funds companies and organisations - Equity capital and the elderly
D-80336 München
with a social purpose in German-speaking - Mezzanine capital German-speaking - Employment and
Germany
countries. The foundation seeks projects that are - Debt capital countries education
+49 89 2 00 01 2530
innovative with a strong social impact, are led by - Grants - Marginalized groups
info@bonventure.de
motivated and committed social entrepreneurs, and - Ecological
www.bonventure.de
will be financially self-sustaining in the long term.
The Children‘s Investment Fund

- Children living in
Foundation
poverty in developing
7 Clifford Street
Africa countries, specifically
The Children’s Investment Fund Foundation London W1S 2WE
- Grants Asia HIV/AIDS, education,
(UK) aims to demonstrably improve the lives of United Kingdom
Mid Americas water, sanitation and
children living in poverty in developing countries +44 207 440 2357
emergency and hygiene
through large-scale and sustainable impact. info@ciff.org
and humanitarian aid
www.ciff.org
28
Instruments Focus
Charities Aid Foundation
7th Floor, St Andrew‘s House,
18-20 St Andrew Street
- Debt capital London EC4A 3AY
United Kingdom - No sector focus
CAF Venturesome is a social investment fund that - Equity capital United Kingdom
provides investment to help charities and social +44 3000 123 300
enterprises deliver on their mission. venturesome@cafonline.org
www.venturesome.org
Convivatus Social Capital

- Compatibility of family Schnabelweg 60
- Debt capital and work 8832 Wilen
Convivatus Social Capital provides successful German-speaking
- Mezzanine capital - Young people Switzerland
social entrepreneurs the strategic and financial countries
- Equity capital - Services for the elderly + 41 44 380 1650
basis for sustainable growth. In this way,
frank.hinrichs@convivatus.com
Convivatus wants to be a catalyst for positive
www.convivatus.com
social change.
Core Innovation Capital

Core Innovation Capital invests in the most 611 Broadway
- Financial technology
innovative companies serving underbanked New York, NY 10012
companies providing
consumers. CIC focuses on early growth-stage for- - Equity capital United States United States of America
consumer finance
profit companies whose management shares its +1 212 780 0193
products
vision that technology-driven solutions focused on info@corevc.com
delivering the highest value to underbanked people www.corevc.com
can create great businesses and strengthen the
Amercian middle class.
29
Instruments Focus
d.o.b Foundation
d.o.b foundation invests in and supports social - Debt capital IJsseldijk 1
entrepreneurs who identify commercial - Convertible loans 8194 LA Veessen
The Netherlands
opportunities in social issues. The foundation - Mezzanine finance - No focus The Netherlands
Africa
strives for a structural improvement of the - Equity capital +31 578631111
wellbeing of people who are marginalized or living - Convertible grant info@dobfoundation.nl
in poverty. www.dobfoundation.nl
E+Co U.S.
383 Franklin Street
E+Co makes clean energy investments in Africa
- Debt capital Bloomfield, NJ, 07003 USA
developing countries. With 15 years of experience Asia - Clean Energy
- Equity capital +1.973.680.9100
Latin America
and offices in 8 locations, E+Co's innovative EandCo.USA@EandCo.net
business model provides lasting solutions to eandco.net
climate change and poverty.
The EH Foundation
Kappelistrasse 41
- Grants
The EH Foundation’s goal is to be the partner of 704 Herrliberg
- Debt capital Africa - ―Bottom of the
choice for both social entrepreneurs and social Switzerland
- Equity capital Asia Pyramid‖ solutions
philanthropists in sourcing, supporting and scaling +41 7946 90396
- Convertible debt
innovative ideas that directly and positively impact eva@theehfoundation.org
the lives of the world‘s most impoverished people. www.theehfoundation.org
30
Instruments Focus
Ferd Social Entrepreneurs
- Grants P.O.Box 34
Ferd Social Entrepreneurs supports social - Guarantees 1324 Lysaker
entrepreneurs who work to help ensure that - Children and young
- Convertible loan Norway Norway
children and young people can realize their goals people
- Equity capital +47 67 10 80 50 / +47 957 21 740
and recognize that they do have opportunities. - Convertible grants kgl@ferd.no
www.ferd.com
Fondation Demeter
44, rue Vaneau
- Children and young 75007 Paris
- Interest-free loans
Fondation Demeter helps charities improve their Worldwide people France
- Grants
operating processes and governance principles so - Microfinance +33 14548 8856
as to make the best use of their resources and to contact@
move towards self-sufficiency fondationdemeter.com
Fondazione Oliver Twist Onlus
Via Bigli, 21
20121 Milan
Fondazione Oliver Twist Onlus operates in the - Children and young
- Grants Italy Italy
social field by setting up and supporting projects people
+39 277718726
designed to help minors in difficult circumstances info@fondazioneolivertwist.org
www.fondazioneolivertwist.org
31
Instruments Focus
- Democracy
Ford Foundation
- Economic fairness
- Debt capital 320 East 43rd Street
The Ford Foundation is an independent, - Education and research
- Equity capital New York, N.Y. 10017
nonprofit, nongovernmental organization. The fund Worldwide - Environment
- Loan Guarantee USA
aims to give all people the opportunity to reach - Human rights
- Grants +1 (212) 573 5000
their full potential, contribute to society, and have a - Health
www.fordfoundation.org
voice in the decisions that affect them. - Social Justice
Africa (Kenya,
Tanzania,
Grassroots Business Fund
- Equity capital Zambia, Ghana)
1601 Connecticut Avenue NW
- Debt capital Asia (India, - Agribusiness
The Grassroots Business Fund strives to Suite 501
- Convertible loans Cambodia, - BoP Services
create a world where economic opportunity Washington, DC 20009
- Royalty-based Indonesia) - Innovations in Finance
reaches everyone. GBF builds and supports +1 202 518 6865
loans Latin America - Artisanal
www.gbfund.org
High Impact Businesses that provide - Guarantees (Bolivia,
sustainable economic opportunities to millions Colombia,
of people at the base of the economic pyramid. Guatemala, Peru)
- Microfinance
- Information and
India Communications Gray Ghost Ventures
Gray Ghost Ventures is an impact investment - Equity capital South Asia Technology 2200 Century Parkway, Suite 100
firm dedicated to providing market-based - Debt capital Worldwide (new application of Atlanta, GA 30345
capital solutions to entrepreneurs who are (Microfinance) proven technologies) +1 678 365 4700
- Affordable private info@grayghostventures.com
addressing the needs of low-income
communities in emerging markets. schools
32
Instruments Focus
IGNIA Partners, LLC
Av. Ricardo Margáin 575
Parque Corporativo Santa
IGNIA is a Mexian venture capital investment
- Debt capital Engracia
firm that supports the founding and expansion of Latin America - Base of the Pyramid
- Equity capital San Pedro Garza García, N.L.
high growth social enterprises that serve the base
México 66267
of the socio-economic pyramid.
+52 81 8000 7165
www.ignia.com.mx
Impetus Trust
Impetus Trust invests in ambitious charities and 20 Flaxman Terrace
social enterprises that fight economic disadvantage. London WC1H 9PN
Impetus achieves this through its highly effective - Grants United Kingdom - Poverty reduction United Kingdom
model of venture philanthropy which has three key +44 203 3843940
components: unrestricted strategic funding; very info@impetus.org.uk
hands-on support from the Impetus investment www.impetus.org.uk
team and specialist support for capacity building,
Inspiring Scotland
Riverside House
502 Gorgie Road
Inspiring Scotland‘s aims to change people‘s lives
Edinburgh EH11 3AF
for the better through significant long term funding - Children
- Grant Scotland United Kingdom
and development support for Scotland‘s charities. - Youth
+44 131 442 8760
It seeks to create sustained change and to achieve
enquiries@
long lasting impacts for Scotland‘s most vulnerable
inspiringscotland.org.uk
people and communities through partnership and
www.inspiringscotland.org.uk
collaboration and by tackling tough social issues.
33
Instruments Focus
LGT Venture Philanthropy
Africa - Relief of human Städtle 28
- Grants China suffering 9490 Vaduz
The objective of LGT Venture Philanthropy is to - Debt capital India - Education Principality of Liechtenstein
raise the sustainable quality of life of less - Equity capital Southeast Asia - Creation of sustainable +41 44250 8281
advantaged people especially those in the Latin America livelihoods lgt.vp@lgt.com
developing world www.lgt.com
noaber Foundation
The noaber Foundation aims to initiate and Dorpsstraat 14, PO BO 20
Europe
support the acceleration of innovations in the civil - Debt capital - Culture and recreation 6740 AA Lunteren
Africa
society where ‗noabership‘ (neighbourship) is key. - Equity capital - Education and research The Netherlands
Asia
These innovations are related to health and care, - Grants - Health + 31 31859 6400
North America
education and community building. To reach their poostlander@noaber.com
aims, they act as an ‗entrepreneurial www.noaber.com
philanthropist‘.
- Affordable housing
Bamboo Finance S.à.r.l.
The Oasis Fund (advised by Bamboo Finance) - Healthcare
32 rue de Malatrex
invests in commercially viable companies that - Education
Africa 1201 Geneva
deliver essential goods and services which directly - Equity capital - Energy
Asia Switzerland
benefit low income communities by providing - Debt capital - Livelihood
Central America +41 22 596 4750
access to affordable housing, healthcare, education, opportunities
info@bamboofinance.com
energy, livelihood opportunities, water, sanitation - Water
www.bamboofinance.com
and the like. - Sanitation
34
Instruments Focus
The One Foundation
- Poverty & 35 Barrow Street
The One Foundation aims to improve the life disadvantage Dublin 4
Ireland
chances of disadvantaged children and young - Grants - Mental health Ireland
Asia
people. The One Foundation is a private - Integration of +353 1 8088800
philanthropic fund that will spend down its capital minorities info@onefoundation.ie
over ten years (2004-2013). www.onefoundation.ie
- Development and PhiTrust Active Investors
housing 41 rue Boissyd‘Anglas
PhiTrust is dedicated to funding and mentoring - Environment 75008 Paris
- Equity capital
companies in the fields of social business through Worldwide - Health France
- Debt capital
its foundation and social investment funds. - Cleantech +33 15535 0755
Phitrust focuses its investments both at a European - Microfinance martina.vonrichter@phitrust.com
level as well as a worldwide level. - Employment www.phitrustpartenaires.com
Private Equity Foundation

The Private Equity Foundation‘s core mission is 2 Bath Place, Rivington Street,
to reduce the number of young people not in London EC2A 3DB
- Children and young
education, employment or training (NEET) so they - Grants Europe United Kingdom
people
can reach their full potential. We recognise that +44 845 838 7330
young people face a journey from birthplace to info@privateequityfoundation.org
workplace with numerous obstacles preventing www.privateequityfoundation.org
them reaching their full potential.
35
Instruments Focus
REDF
REDF is a San Francisco-based venture philanthropy 631 Howard Street, Suite 320
organization that invests in nonprofit-run businesses. It - Children, youth
- Equity capital United States San Francisco, CA 94105
gives funding and business assistance to a carefully - Education and research
- Grants (California) United States of America
selected portfolio of social enterprises that employ - Employment
+1 (415) 561-6677
young people disconnected from school and work, and www.redf.org
adults who are overcoming barriers to employment.
responsAbility Social Investments

responsAbility provides commercial finance to - Microfinance
Josefstrasse 59
organizations and initiatives that give people at the base institutions
8005 Zurich
of the pyramid access to services, markets, products and - Debt capital - Fair trade producers
Worldwide Switzerland
information. ResponsAbility is constantly on the - Equity capital - Small and medium-
sized enterprises in +41 44250 9930
lookout for entrepreneurial, innovative business models
in developing countries and emerging markets, investing developing countries info@responsAbility.com
in these ideas directly or indirectly via investment www.responsability.com
products.
Robin Hood Foundation
- Children, youth 826 Broadway, 9th Floor
- Education and research New York, NY 10003
Robin Hood targets poverty in New York City by - Grant New York City
- Poverty +1 (212) 227-6601
finding and funding the best and most effective - Health info@robinhood.org
programs and partnering with them to maximize results. www.robinhood.org
36
Instruments Focus
Root Capital
955 Massachusetts Ave.
Root Capital is a nonprofit social investment fund that
5th floor
is pioneering finance for grassroots businesses in rural
Latin America - No focus Cambridge, MA 02139
areas of developing countries. We provide capital, - Debt capital
Africa United States of America
deliver financial training, and strengthen market
+1 617 661 5792
connections for businesses that build sustainable
finance@rootcapital.org
livelihoods and transform rural communities in poor,
www.rootcapital.org
environmentally vulnerable places.
Social Investors Club

- Debt capital 29/F, 8 Wyndham Street
Social Investors Club is a social investment company
- Equity capital Central, Hong Kong
established in Hong Kong in 2010. Formed by socially- Hong Kong - No focus
- Mezzanine +852 21568876
minded investors with diverse business, finance, social
capital info@socialinvestorsclub.com
service and academia backgrounds, SIC invests in social
www.socialinvestorsclub.com
enterprises driven by clearly defined missions for
creating positive social or environmental impact.
Canopus Foundation
Solar for All is a global initiative that wants to take a Grünwälderstr. 10-14
big step ahead in making solar energy affordable to the Latin America 79098 Freiburg
- Debt capital
1.6 billion people without access to electricity. More Africa - Solar industry Germany
than single social entrepreneurs have to be supported to - Equity capital
Asia +49 761 2020 172
accomplish a systemic change; therefore the general contact@sfa-pv.org
approach comprises the entire solar PV value chain and www.sfa-pv.org
related financial services.
37
Instruments Focus
Social Venture Fund

Sendlingerstr. 7
- Debt capital
80331 Munich
- Equity capital
The Social Venture Fund invests in social businesses, Europe - No focus Germany
which have innovative and entrepreneurial driven - Mezzanine
+49 6960 9184-15
solutions for urgent social and environmental capital
info@socialventurefund.com
challenges. The Fund provides support when it is not www.socialventurefund.com
possible to acquire traditional sources of capital.
Table 2: List of social investors
Source: EVPA, Websites
38
4.7 Social Investors with Focus on Microfinance

Instruments Focus
AlphaMundi Group
- Microfinance
Augustinergasse 21
AlphaMundi is a Swiss commercial enterprise - Sustainable agriculture
- Debt capital CH-8001 Zurich
with a social mission. Our mission is to help Latin America - Renewable energy
- Equity capital +41 44 5080 556
achieve significant and self-sustaining poverty - Rural development
info@alphamundi.ch
reduction and environmental preservation in - Education
www.alphamundi.ch
developing countries.
Africa ASN Bank

The ASN-Novib Fund aims to promote a broad Asia Alexanderstraat 28
participation of all groups in the market economy - Guarantees
Latin America - Microfinance 2514 JM Den Haag
of developing countries. To achieve this, the fund - Debt capital
Former Soviet institutions The Netherlands
makes capital available to financial institutions - Equity capital
providing credit to clients with economic Union +31 70 356 933
opportunities but limited access to financial Eastern Europe www.asnbank.nl
services
Dexia Microcredit Fund

Africa 32 Rue Malatrex
Asia 1201Genève
The Dexia Microcredit Fund is the first - Microfinance
- Debt capital Central and Switzerland
commercial investment fund designed to finance institutions
Eastern Europe +41 22 596 4777
microfinance institutions specialized in financial Latin America info@blueorchard.com
services to small companies in emerging markets www.blueorchard.com
(co-managed by BlueOrchard Finance).
39
Instruments Focus
Dual Return Fund
Absolute Portfolio Management
The Dual Return Fund has a double bottom line Wallnerstraße 3 / 17
strategy. The fund maximizes both the risk-return - Microfinance 1010 Vienna
- Debt capital Worldwide
profile to benefit the investor and the social institutions Austria
outreachin breadth and depth to micro, small and +43 1 533 59 76
medium enterprises in emerging and least info@visionmicrofinance.com
developed economies. www.visionmicrofinance.com
European Fund for

Southeast Europe
The European Fund for Southeast Europe aims Eschersheimer Landstr. 6
to foster economic development and prosperity - Debt capital - Microfinance 60322 Frankfurt am Main
through the sustainable provision of additional Southeast Europe
- Equity capital institutions Germany
development finance. The fund offers long-term +49 69 9778765026
funding instruments to qualified partner lending s.djikic@finance-in-motion.com
institutions to better serve the financing needs of www.efse.lu
micro and small enterprises and low-income private
households
Fondation Demeter
44, rue Vaneau
- Children and young
- Interest-free loans 75007 Paris
Fondation Demeter helps charities improve their Worldwide people
- Grants France
operating processes and governance principles so - Microfinance
+33 14548 8856
as to make the best use of their resources and to pascal@ceresfinance.com
move towards self-sufficiency
40
Instruments Focus
- Microfinance
- Information and
India Communications Gray Ghost Ventures
Gray Ghost Ventures is an impact investment - Equity capital South Asia Technology 2200 Century Parkway, Suite 100
firm dedicated to providing market-based - Debt capital Worldwide (new application of Atlanta, GA 30345
capital solutions to entrepreneurs who are (Microfinance) proven technologies) +1 678 365 4700
- Affordable private info@grayghostventures.com
addressing the needs of low-income
communities in emerging markets. schools
Oikocredit
P.O. Box 2136
Africa
3800 CC Amersfoort
Oikocredit, as a worldwide cooperative society, Asia - Microfinance
- Debt capital Netherlands
promotes global justice by challenging people, Europe institutions
+31 33422 4040
churches and others to share their resources Latin America
info@oikocredit.org
through socially responsible investments and by www.oikocredit.org
empowering disadvantaged people with credit.
The Omidyar-Tufts Microfinance Fund was Omidyar-Tufts Microfinance

launched in 2005 through a unique partnership - Debt capital - Microfinance Fund
between Pierre and Pam Omidyar and Tufts Worldwide
- Equity capital institutions microfinance@tufts.edu
University. The Omidyars gave the university $100 www.tufts.edu/microfinancefund
million to create a fund that would be invested
entirely in international microfinance initiatives.
41
Instruments Focus
responsAbilitySocial Investments
- Microfinance
responsAbility provides commercial finance to Josefstrasse 59
institution
organizations that give people at the base of the 8005 Zurich
- Debt capital - Fair trade producers
pyramid access to services, markets, products and Worldwide Switzerland
- Equity capital - Small and medium-
information. responsAbility is constantly searching +41 44250 9930
sized enterprises in
for entrepreneurial, innovative business models in info@responsAbility.com
developing countries
developing countries and emerging markets, www.responsability.com
investing in these ideas directly or indirectly.
SNS Institutional Microfinance

The SNS Institutional Microfinance Fund aims Fund
at providing resources for small self-employed Africa
Pettelaarpark 120
operators in a large number of developing countries - Equity capital Eastern Europe - Microfinance
5216 PT 's-Hertogenbosch
against rates that are in accordance with the market. - Debt capital Latin America institutions
The Netherlands
The fund does not grant loans to individual Southeast Asia
+31 73683 3355
businesses but lends money to or invests in the www.snsam.nl
share capital of microfinance institutions.
Table 3: List of social investors
Source: Websites
42
4.8 Value Banks
Bank including short Mission Statement Geographical Focus Main Lending Focus Contact Details
Alternative Bank Schweiz

Amthausquai 21
- Social or ecological
4601 Olten
housing
The Alternative Bank Schweiz emphasises ethical Switzerland Switzerland
- Organic agriculture,
principles instead of maximum profits. As the leading +41 62 206 16 16
- Renewable energy
provider of ethical banking services and a pioneer in the contact@abs.ch
implementation of social and environmental standards, www.bas.ch
ABS gives encouragement to the Swiss banking and
financial markets.
BancaPopolareEtica
Banca Popolare Etica was created in 1999 by a big
- Organizations operating Via NiccolòTommaseo 7
coalition of the major Italian social organizations who
within the third-sector that 35131 Padova
wanted to create a place where savers, driven by the Italy
carry out civil society Italy
common desire of a more transparent and responsible
oriented economic projects +39 498771111
management of financial resources, may meet socio-
www.bancaetica.it
economic initiatives, inspired by the values of a
sustainable social and human development.
43
BancoSol
CalleNicolás Acosta No. 289
- Entrepreneurs with a small
P.O. Box: 13176
capital base but with
Bolivia La Paz - Bolivia
dynamic adjustment
Banco Sol is a bank that offers opportunities to the +5912 2484242
capabilities
lowest-income sectors for a better future, providing them info@bancosol.com.bo
with high-quality, integrated financial services. www.bancosol.com.bo
BRAC Bank
1 Gulshan Avenue
Gulshan-1
Brac Bank aims to build a profitable and socially - Microfinance (in a related Dhaka 1212
responsible financial institution focused on Market and Bangladesh program) Bangladesh
Business with growth potential, thereby assisting BRAC - SME, Retail and Corporate +880 2885 2233
and stakeholders build a "just, enlightened, healthy, enquiry@bracbank.com
democratic and poverty free Bangladesh". www.bracbank.com
Charity Bank
194 High StreetTonbridge
Kent TN9 1BE
United Kingdom - No focus United Kingdom
Charity Bank finances social enterprises, charities and +44 1732 774040
community organisations, with the support of depositors enquiries@charitybank.org
and investors who want to use their money to facilitate www.charitybank.org
real social change
44
Cultura Bank
- Education (private schools) Holbergsplass 4 i
- Agriculture Oslo 0130
Cultura Bank's main task is to finance projects which
Norway - Healthcare Norway
benefit society and contribute to a better natural
- Housing +47 2299 5199
environment. The bank emphasises building alliances
- Microfinance cultura@cultura.no
between depositors and lenders and to underpin this it
www.cultura.no
practises transparency as a carrying principle.
GLS Bank
- Agriculture Christstr. 9
For GLS Bank, conducting a professional, sustainable - Development aid 44789 Bochum
Germany
banking business means the incorporation of social, - Education Germany
ecological and economic criteria. The money of our - Health care +49-234-5797-0
customers is invested exclusively in companies and - Social welfare www.gls.de
projects whose performance under the above mentioned
criteria is outstanding.
Merkur Cooperative Bank

Merkur Cooperative Bank is founded on the idea of Vesterbrogade 40, 1.
conscious handling of money, and on criteria that include - Environmental, social and 1620 Copenhagen V
Denmark
environmental, social and ethical aspects in addition to cultural sectors Denmark
financial considerations. Merkur pursues a situation +45 7027 2706
where the individual, based on his own insight, meets the kbh@merkur.dk
needs of others in a dignified way. www.merkur.dk
45
Mibanco, Banco de la
Microempresa
Av. Domingo Orue
Mibanco is committed to offering their communities Peru - No focus
165 Surquillo
opportunities for progress and access to the financial Peru
system. +51 319 9999
www.mibanco.com.pe
New Resource Bank

405 Howard Street, Suite 110
new resource bank‘s mission is to advance sustainability San Francisco, CA 94105
United States - No focus
with everything we do—the loans we make, the way we United States of America
operate, and our commitment to putting deposits to work +1 415 995 8100
for good. To us, banking isn‘t just a service—it‘s a way to ggroff@newresourcebank.com
create a better world. www.newresourcebank.com
OneCalifornia Bank
OneCalifornia Bank will improve economic opportunity 1438 Webster Street, Suite 100
for low-to moderate-income communities throughout - Housing Oakland, CA 94612-3206
United States
California. We will partner with respected community - Green industries United States of America
institutions to provide banking services to small to +1 51055 08400
medium-size businesses, non-profit organizations, mybank@OneCalBank.com
community facilities, affordable-housing developers, www.OneCalBank.com
individuals and families.
46
- Nature and the
environment sectors
Triodos Bank finances companies, institutions and (organic agriculture,
Triodos Bank
projects that add cultural value and benefit people and the Africa wholesale, health food
Nieuweroordweg 1,
environment, with the support of depositors and investors Asia stores and renewable
3704 EC Zeist
who want to encourage corporate social responsibility and Europe energy )
The Netherlands
a sustainable society. South America - Social business
+31 30 693 65 00
Triodos Bank´s mission is to help create a society that - Culture and society
www.triodos.com
promotes peoples´ quality of life and that has human - North-South projects (fair
dignity at its core trade, microfinance)
Vancity
PO Box 2120
Vancity aims to be a democratic, ethical, and innovative Station Terminal
provider of financial services to their members. Through Canada - No focus
Vancouver, BC
strong financial performance, they serve as a catalyst for Canada
the self-reliance and economic well-being of our +1 604 877 7000
membership and community. www.vancity.com
XacBank
Prime Minister Amar's Street
Sukhbaatar district
- Education P.O.Box-46/721
Xac Bank aims to contribute to sustainable development Mongolia
- Environment Ulaanbaatar – 14200
of Mongolia that can come only from educated and
Mongolia
skilled people and competitive and dynamic businesses
+97611 318185
concerned equally about Planet, People, and Profit.
www.xacbank.mn
Table 4: Value Banks
Source: Websites, Global Alliance for Banking on Values
47
4.9 Social Investment Advisory
Social Investment Advisory with short Mission Statement Geographical Focus Main Sector Focus Contact Details
Avant Gardist
Johannesgasse 18
avant-gardist identifies, design and implement social 1010 Vienna
projects that help foundations, corporations, banks and Global - No Sector focus Austria
nonprofits increase their social impact. We assist our +43 1229 7139
clients distinctive and sustainable values across the globe. office@avant-gardist.com
We leverage our client‘s expertise and and insights to www.avant-gardist.com
benefit society and sharpen their competitive advantage
- Services for low income
Bamboo Finance S.à.r.l.
communities by providing
32 rue de Malatrex
access to affordable
1201 Geneva
Bamboo Finance‘s mission is to create value for our housing, healthcare,
Global Switzerland
investors, partners and the field of social education, energy,
+41 22 596 4750
entrepreneurship. We achieve this by promoting livelihood opportunities,
info@bamboofinance.com
appropriate finance for the growth of enterprises which water, sanitation and the
www.bamboofinance.com
are having a direct positive impact on society. like
Light Years IP
1700 N Moore St.
Light Years IP is a non-profit organization dedicated to - IP tools (patents, Suite 1610
alleviating poverty by assisting developing country trademarks and licenses) to Arlington, VA 22209
Developing countries
producers gain ownership of their intellectual property secure more sustained and United States of America
and to use the IP to increase their export income and higher export income. +1 703 600 8324
improve the security of that income. info@lightyearsip.net
www.lightyearsip.net
48
Social Investment Advisory with short Mission Statement Geographical Focus Main Sector Focus Contact Details
Social Finance Ltd

Many charities and social enterprises face serious 131-151 Great Titchfield Street
financial challenges that stop them from carrying out their London. W1W 5BB
work effectively. Social Finance believe that, if social UK - No Sector focus United Kingdom
problems are to be tackled successfully, organisations +44 207 667 6370
seeking to solve them need sustainable revenues and info@socialfinance.org.uk
investment to innovate and grow. Our role is to devise the www.socialfinance.org.uk
financial structures and raise the capital to enable this to
happen.
Total Impact Advisor's mission is to advise both Total Impact Advisors

entrepreneurs and those seeking to maximize the social mbrownrigg@
Global - No Sector focus
impact of their capital. With our deep roots in banking, totalimpactadvisors.com
development, innovation, public policy and private www.totalimpactadvisors.com
investment, we believe we have a team that can find the
nexus where "social purpose meets financial promise."
Table 5: Social Investment Advisory
Source: Websites
49
4.10 Funding Consultancies
Funding Consultancy with short Mission Statement Geographical Focus Main Consulting focus Contact Details
New Philanthropy Capital

185 Park Street 3rd Floor
New Philanthropy Capital (NPC) is a consultancy and London SE1 9BL
- UK
think tank dedicated to helping funders and charities - No Focus United Kingdom
- Global
achieve a greater impact. NPC's mission is to put +44 20 7620 4850
effectiveness at the heart of how charities work and how info@philanthropycapital.org
funders give, so that more lives can be changed for the www.philanthropycapital.org
better.
Phineo
Anna-Louisa-Karsch-Straße 2
10178 Berlin
Germany - No Focus Germany
PHINEO‘s mission is to strengthen the nonprofit sector +49 30 520065400
and civil society. Using our unique, multistage analysis info@phineo.org
process, we build bridges between social investors and www.phineo.org
nonprofit organizations.
Table 6: Funding Consultancies
Source: Websites
50
4.11 Social Stock Exchanges
Social Stock Exchange with Short Mission Statement Trading Centre Focus Contact Details
Impact Investment Exchange (Asia)

93A Amoy Street
Impact Investment Exchange Asia aims to provide Singapore - No trading yet Singapore 069913
+65 6221 7051
Social Enterprises in Asia with greater access to capital,
info@asiaiix.com
allowing them to more rapidly expand the impact of their www.asiaiix.com
activities.
NExT SSE
c/o KonvergentaInterZero GmbH
NExt SSE is a project committed to bringing capital to Rungestr. 19
social ventures - organisations with a social, ethical or Berlin - No trading yet 10179 Berlin
ecological focus and a sound business model. Germany
In the months to come, legal requirements for establishing +49 30 6098810 10
info@nextsse.com
a 'real' exchange are being clarified in collaboration with
www.nextsse.com
BaFin (the German federal financial supervisory agency).
The Social Stock Exchange is designed to provide access

to capital – specifically risk capital – for organisations
London - No trading yet
Pradeep Jethi, CEO:
that are for-profit social purpose businesses, most likely pjethi@gmail.com
to be from sectors that create social value such as health,
leisure, transport, housing, green- and ethical
consumerism, and clean- and green-technology.
Table 7: Social Stock Exchanges
Source: Websites, Personal information
51
5 Task Force Members
Martin Burt Macarena Currin

Fundación Paraguaya Rodelillo Foundation
Enayetullah Iftekhar Christopher J. Elias

Waste Concern PATH (Programme for
Appropriate Technology in
Health)
David Green Ronald Grzywinski
Andreas Heinecke Garth C. Japhet

Dialogue Social Heartlines
Enterprise
Timothy Ma Kam Wah Shona McDonald
Senior Citizen Home Shonaquip
Safety Association
(SCHSA)
Kovin Naidoo Ziad Refai

International Center for Tamweelcom
Eye Care Education
(ICEE)
Arregui Álvaro Pierre Tami

Rodríguez
Hagar International
IGNIA
Compartamos Banco
Silverius Oscar Unggul Bart Weetjens

Telapak
HeroRAT
Ariel Zylbersztejn
Cinepop
Cinepop
53
6 Index
Acumen Fund ................................................ 27 Internal financing .......................................... 21
AlphaMundi ............................................ 27, 39 LGT Venture Philanthropy ........................... 34
Alternative Bank Schweiz ............................. 43 Light Years IP ............................................... 48
Artha .............................................................. 27 Merkur Cooperative Bank ............................ 45
ASN-Novib Fund .......................................... 39 Mezzanine capital ......................................... 22
Auridis ........................................................... 28 Mibanco ........................................................ 46
avant-gardist .................................................. 48 Negotiating the financing terms .................... 13
Bamboo Finance ............................................ 48 New Philanthropy Capital............................. 50
Banca Popolare Etica..................................... 43 new resource bank ........................................ 46
Banco Sol ...................................................... 44 NExt SSE ...................................................... 51
BonVenture ................................................... 28 noaber Foundation ........................................ 34
Brac Bank ...................................................... 44 Oasis Fund .................................................... 34
CAF Venturesome ......................................... 29 Oikocredit ..................................................... 41
Charity Bank ................................................. 44 Omidyar-Tufts Microfinance Fund............... 41
Children‘s Investment Fund Foundation ....... 28 OneCalifornia Bank ...................................... 46
Convertible grants ......................................... 22 Performance measurement............................ 16
Convivatus Social Capital ............................. 29 PHINEO........................................................ 50
Core Innovation Capital ................................ 29 PhiTrust ........................................................ 35
Cultura Bank ................................................. 45 Private Equity Foundation ............................ 35
d.o.b foundation............................................. 30 Recoverable grants........................................ 22
Debt capital ................................................... 22 REDF ............................................................ 36
Dexia Microcredit Fund ................................ 39 responsAbility ......................................... 36, 42
Dual Return Fund .......................................... 40 Revenue share agreements ............................ 22
Due diligence................................................. 11 Robin Hood................................................... 36
E+Co ............................................................. 30 Root Capital .................................................. 37
EH Foundation .............................................. 30 Screening ...................................................... 11
Equity capital................................................. 22 Selection process .......................................... 11
European Fund for Southeast Europe ............ 40 SNS Institutional Microfinance Fund ........... 42
Exit ................................................................ 18 Social capital markets ..................................... 6
External financing ......................................... 21 Social Finance............................................... 49
Ferd Social Entrepreneurs ............................. 31 Social investment advisors ........................... 19
Financing instruments ............................. 18, 23 Social investment funds ................................ 19
Fondation Demeter .................................. 31, 40 Social Investors Club .................................... 37
Fondazione Oliver Twist Onlus .................... 31 Social Stock Exchange London .................... 51
Ford Foundation ............................................ 32 Social stock exchanges ................................. 19
Forgivable loans ............................................ 22 Social Venture Fund ..................................... 38
Funding consultancies ................................... 20 Solar for All .................................................. 37
GLS Bank ...................................................... 45 Task force members...................................... 52
Grants ............................................................ 22 The One Foundation ..................................... 35
Grassroots Business Fund ............................. 32 Total Impact Advisor .................................... 49
Gray Ghost Ventures ............................... 32, 41 Triodos Bank ................................................ 47
Hybrid capital ................................................ 22 Value banks .................................................. 19
IGNIA............................................................ 33 Vancity.......................................................... 47
Impact Investment Exchange Asia ................ 51 Venture philanthropy funds .......................... 19
Impetus Trust................................................. 33 Xac Bank ...................................................... 47
Inspiring Scotland ......................................... 33
54
7 Sources
The content is based on a survey of Schwab Fellows conducted in December 2010, interviews
with Schwab Fellows and the following literature:
Achleitner, A.-K., Pöllath, R. & Stahl, E. (Ed.) (2007): 'Finanzierung von

Sozialunternehmern, Konzepte zur finanziellen Unterstützung von Social
Entrepreneurs', Stuttgart: Schäffer-Poeschel.
Achleitner, A.-K., Schraml, S. & Tappeiner, F. (2008) 'Private Equity in

Familienunternehmen: Erfahrungen mit Minderheitsbeteiligungen', Download:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1117903.
Achleitner, A.-K., Spiess-Knafl, W. & Volk, S. (2011) 'Finanzierung von Social Enterprises –
Neue Herausforderungen für die Finanzmärkte', in Hackenberg and Empter (Ed.),
Social Entrepreneurship - Social Busines, VS Verlag, Wiesbaden.
Achleitner, A.-K. & Spiess-Knafl, W. (in press) 'Financing of Social Entrepreneurship' in

Volkmann, Tokarski & Ernst (Ed.), Understanding Social Entrepreneurship & Social
Business Be Part of Something Big.
Clark, C. / Rosenzweig, W. / Long, D. / Olsen, S. (2004): Double Bottom Line Project

Report: Assessing Social Impact in Double Line Ventures.
Heister, P. (2010) 'Finanzierung von Social Entrepreneurship durch Venture Philanthropy und
Social Venture Capital', Gabler Verlag, Wiesbaden.
John, R. (2006) 'Venture Philanthropy - The Evolution of High Engagement Philanthropy in

Europe', Download: www.sbs.ox.ac.uk/skoll.
Roder, B. (2010) 'Reporting im Social Entrepreneurship', Gabler Verlag, Wiesbaden
Most websites were cited in the text. Websites used for a general overview were:
European Venture Philanthropy Association (EVPA) www.evpa.eu.com

Global Alliance for Banking on Values (GABV) www.gabv.org
Schwab Foundation for Social Entrepreneurship www.schwabfound.org
55

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Social Investment Manual

A Guide for Social Entrepreneurs

Ann-Kristin Achleitner led by Mirjam Schöning

Posted: 18 May 2011

We look forward to your comments or suggestions. Please contact wolfgang.spiess-knafl@wi.tum.de and

Figure 1 Social Capital Markets

Source: Achleitner & Spiess-Knafl (in press)

Figure 2 Classification of available financing instruments

Illustration based on Achleitner, Spiess-Knafl & Volk (2011)

Duration: Short term

Duration: Unlimited - Dilution of ownership

Duration: Long term (3-7 years) - Inexpensive financing instrument

Figure 3 Investment fit

Source: Own illustration

Debt capital (loan)

Figure 4 Impact Value Chain

Illustration based on Clark et al. (2004) and Roder (2010)

Figure 5 Exit considerations

Illustration based on Achleitner & Spiess-Knafl (in press)

Social Investment Advisors

Social Stock Exchanges

Social Investment Funds

Venture Philanthropy Funds

Access to capital can be classified as:

Figure 6 Classification of the financing structure

Source: Achleitner, Spiess-Knafl & Volk (2011)

Figure 7 Financing instruments

Source: Achleitner, Spiess-Knafl & Volk (2011)

Name of the Organization: [add the name of the organization] dd/mm/yyyy

1. Profit & Loss (€)

Half Year ended Revised annual budget

Sales ____ ____

2. Measured social impact

Results over Half Year ended

Number of people employed ____

3. Activity development over the period

[add information on the key developments of the last reporting period]

4. Favorable development over the period (strengths)

5. Unfavorable development over the period (weaknesses)

6. Comments and additional information on the social impact figures

[add information about the development of the social impact figures]

7. Reasons if the annual budget has been amended

8. Key targets for the next Half Year

Name of the Organization: [add the name of the organization]

1. Information about the Founder

The organization was established in ______. The headquarter is based in ______

2008: US$ ______

[add information on the current market]

b) Market Potential / Growth Opportunities

Board of Directors / Advisory Board

______ ______, Chairman, role outside of social enterprise

______ ______, Executive Director

8. Grants and Awards

9. Requested Amount of Money

10. Use of Capital

[add information on how the capital will be used]

11. Type of Investment you request (Loan or Equity)

Sales

The organization was established in . The headquarter is based in

, Chairman, role outside of social enterprise

, Executive Director