What is social investment?¶
The Social Economy Data Lab Specification doesn’t seek to impose a strict definition of social investment that published data should meet. That decision can be made by the data holders themselves.
Participants in the social investment market may have different concepts of what can be considered as social investment, or ‘true’ social investment.
A broad understanding is, however, useful as a point of reference. The suggested definition is agnostic about who the investing and recipient organisations are, with the focus instead being on the purpose of the investment itself.
The investment of money with the expectation that a social benefit as well as an economic return will be gained.
This differs from conventional investment in that it is anticipated that a social benefit will be realised through the use of the money. It also differs from philanthropically motivated grantmaking as an economic return is also expected. The economic return does not necessarily have to be profitable, and could be simply expected to cover the cost of the initial outlay.
Social investment, therefore, does not have to be socially motivated. It may be the case that the investor’s motivation is simply to gain an economic return (e.g. in the case of mainstream financial institutions), while the investee’s motivation in accessing the finance is guided by the aim of delivering a social benefit.