Social Entrepreneurship Manual

Social Investment Manual
A Guide for Social Entrepreneurs
Developed by
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
18 May 2011
* Please see page 50 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 37
4.8 Value Banks 40
4.9 Social Investment Advisory 46
4.10 Funding Consultancies 48
4.11 Social Stock Exchanges 49
5 Task Force Members 50
6 Index 52
7 Sources 53
2
Foreword
The basis for this manual was laid at a social entrepreneurs gathering during the World
Economic Forum’s Annual Meeting of New Champions in Tianjin (China) in September
2010. Thirty social entrepreneurs in the Schwab Foundation community came together from
all continents to share their current challenges and deliberate how these challenges could be
addressed by pooling their shared experiences and leveraging the Foundation’s networks.
Subsequently, several task forces were formed to address these common challenges. The task
force on social investment quickly caught the interest of further members within the Schwab
Foundation community, which comprises 200 of the world’s most advanced social
entrepreneurs.
The Schwab Foundation recognizes that social enterprises span the spectrum of grant based to
financially self-sustainable to 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 Schwab social entrepreneurs (70%) either has a hybrid or a
social business model and could therefore benefit from different debt and equity structures to
expand their impact.
Most of the entrepreneurs participating in the social investment task force had collected
experience with social investors. They have gone through long negotiations and learning
processes to access debt or equity capital for their organizations. 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 the social investors to exchange experiences, few, if any investees had exchanged notes
with fellow social entrepreneurs.
The task force therefore set out to assist fellow social entrepreneurs on the path into the social
investment space with this manual. The decision to engage with social investors, as is any
decision by the founders to share responsibility and ownership of their daily operations and
results of their organization with external stakeholders, is one that must be well researched
and the implications carefully considered.
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. Social
investment can offer entrepreneurs the chance to scale up and out their impact exponentially,
but it can also lead to unintended consequences, such as a change in strategic direction, a
divergence from the original values and mission, or a loss of control over the organizational
culture and direct engagement with the community it is serving. Given this, the need for a
manual is ever more important for social entrepreneurs.
It is our hope that the Schwab Community of Social Entrepreneurs will embrace both the
challenges and opportunities represented by the social investment space, and will use as a
launching point this guide and the work of this taskforce. With this, we can deepen our
understanding and widen our use of the practices and metrics of social investment. 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 Prof. 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
Traditionally, 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 deepened and widened.
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
Over the last years there have been increased efforts to facilitate the financing
financ for social
enterprises and to overcome the challenges of the traditional philanthropy model based on
donations. The institutions known in the traditional capital markets have been transferred to
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

Knafl (in press)
Each institution focuses on a specific segment of the social sector. Value banks provide loans
to social enterprises with a low risk profile to minimize the default rate as they have to secure
the deposits of its savers.. Social stock exchanges could be an attractive funding source
sourc for
mature social enterprises with a proven business model and significant capital needs while
venture philanthropy funds provide capital for younger and innovative enterprises.
In addition to the financing institutions, there are also institutions which
whic advise social
enterprises and funders how to structure an investment. Please ssee
ee appendix on page 19 for an
overview.
6
3 The Financing Process
The complete financing
ing process includes the following steps:
- Finding the appropriate financing instrument
- Finding the right social investor
- Approaching the social investor
- Screening and due diligence pprocess
- Negotiating the financing tterms
- 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 which social investor supports his strategy and social
mission.
3.1 Available
ble Financing Instruments
The first step in finding the right financing structure is the choice of the right financing
instrument. When determining the right financing instrument, social entrepreneurs have to ask
the following questions also shown in the ffigure below:
- Would you be able to set aside capital that would allow you to repay any financing
you might receive after a couple of years?
- In thinking about ways that your organization might grow, would you be able to take
on capital that requiress annual interest or dividend payments (e.g. 5% interest)?
interest)
Figure 2 Classification of available financing instruments
Illustration based on Achleitner

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 payment 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 Inv
Investor
The second key element in determing the right financing mix is the financing source. The
questions to ask in finding the right investor are shown in the following figure.
Figure 3 Investment fit
Source: Own illustration
Most social investors concentrate their funding to gain experience and to transfer knowledge
between the social enterprises. For this reason a social investor might only invest in youth
projects in Western Europe. The geographic focus and the sector focus are therefore usually
hard 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
A social investor might only finance a proven business model while others finance
finan individuals
with a promising concept
oncept 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. The first meeting with the social investor or a discussion with other
investees are good ways to answer this question.
9
3.3 Approaching the Social Investor
Social investors are usually interested in screening and analyzing as many social investment
opportunities as possible. Therefore, those funds have low contact barriers and offer
information on their website 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 more personal possibility is the visit of social investment conferences, the dialogue
with investees of the social investor or the dialogue with social investment advisors which do
have 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 usually analyze a few hundred social enterprises per year and use a multi-
stage selection process. Within this selection process, fund managers discuss around 50
different selection criteria. According to Heister (2010) they 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.
Within the criterion “Market” venture philanthropy funds discuss the competition and peers of
the social enterprise and certain characteristics of the target group. Additionally, fund
managers want to understand the potential market size to better evaluate growth strategies.
The selection criterion “Financials” is highly relevant for funds which do expect interest
payments and a repayment after a few years. Fund managers analyze the business model as
well as capital requirements. Basically, they want to understand how and how much income
will be generated during the holding period.
Within the selection criterion “Social Impact” fund managers analyze the scalability and reach
of the business model. Reach is the percentage of the market reached with the concept
whereas 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 regularly discuss different aspects within the group “Social Entrepreneur”.
The most discussed criteria are dedication, creativity and biography. The factors can be
generally divided into five groups which are strategic skills, professional skills, creativity,
attitude and development potential.
A sample of questions to prepare is shown in the following box.
11
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 the 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?
12
3.5 Negotiating the Financing Terms
If the due diligence is finished positively, the social investor and the social entrepreneur start
the negotiations of the financing terms. In some cases the social investor provides the
financing in separate tranches after the reach 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.
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
A social investor would take up between 10-25% of the company and the social entrepreneur
has to think about the valuation of the social enterprise. An essential point is the question if
the transaction is based on nominal or market values. In case of nominal values the repayment
should also be based on nominal values.2
Another issue is the question what kind of financial return the social investor can expect. The
financial return can be realized through an increase of the value of the social enterprise as
well as through dividend payments. Moreover, the social entrepreneur has to address the
question of control and voting rights. The investor should be able to influence decisions in the
company but the social entrepreneur should be careful in giving too extensive rights to the
social investors. The final question is how the social investor can exit the investment after a
few years. Considerations regarding the exit are discussed in more detail 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 ranges from 0% (interest-free loan) to market rate returns (e.g. about 7% in
Western Europe) and depends upon the financial return expectations of the social investor.
Besides interest payments, the social entrepreneur also needs to repay the loan. 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.
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
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 could
be an attractive option for social enterprises.
However, the social entrepreneur also needs to consider the worst-case scenario. In the case of
default or bankruptcy, the loan provider has far-reaching rights. The social entrepreneur
should avoid any personal liabilities as well as too extensive debt to equity swaps. 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).
14
3.6 Working with Investors
After finding the right financing mix and closing the deal, the social entrepreneur has to set up
a working relationship with the social investor. The installation of an advisory board is 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 are usually 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 serve as a sparring partner challenging the decisions of the
management in a favorable atmosphere and thus increasing the quality of the entrepreneurial
decisions and the accountability of the management. However, social investors have extensive
knowledge about corporate governance, reporting, controlling and corporate finance but
limited knowledge of the core activities of the company such as delivering the social services
to the target group. That means that the social entrepreneur should adjust his expectations and
use the existing skill set and network of the social investor.
There are some constellations where the set-up of an advisory board is not recommendable.
Some social enterprises have operations across countries with different funders which all
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. There are so many potential conflicts such as social mission,
profit distribution and future development of the enterprise that the social entrepreneur has to
be certain that he wants to have the social investor as partner over the next years even in times
of stress.
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.
15
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) have described outputs and outcomes as follows:
follows
“The
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
after-school
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
enroll the following year.
Outcomes are the ultimate changes that one is trying to make in the world. For the after-
after
school program, desired outcomes could include higher self
self-esteem
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 no 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/
www.riseproject.
DBL_Methods_Catalog.pdf.
Performance
erformance measurement methods have similar information requirements as financial
analysts assessing the valuation or the credit rating of a company. Those
hose methods do need
16
solid and comparable information to calculate their figures and ratings. In 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 but there is
not yet a globally accepted standard. The Social Reporting Standard (SRS) developed in
Germany can be seen at www.social-reporting-standard.de and another standard developed in
the United States is described in box 05.
From the social entrepreneur’s perspective, reporting is associated with additional efforts and
costs at the beginning but there are also benefits. It allows the social entrepreneur to control
the own target achievement, to improve the 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.
17
3.8 Exit Consideration
In the chapter Negotiating the Financing Terms a few aspects related ed to exit considerations
were already discussed. The exit routes for equity capital,, debt capital and grant funding are
shown in the following figure.
Figure 5 Exit considerations
Source: Achleitner & Spiess-Knafl

Knafl (in press)
In the case of equity capital, there can either be a sale of the shares to a third party investor, a
buy-back arrangement,, an initial public offering on a social stock exchange or the liquidation.
liquidation
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, there can either be a repayment of the loan or the refinancing of the
loan. The refinancing means that another social investor is willing to finance financ the social
investor for the next period. If the social enterprise defaults on the loan (e.g. non-repayment
non
of the loan or long-term delay on scheduled payments), there are three scenarios:
- Social investor institute
institutes bankruptcy proceedings to recover part of the loan
(“liquidation”).
- Social investor extends the period of the repayment schedule ((“financial
“financial flexibility”).
flexibility”
- Social investor accepts equity in exchange for the loan (“debt to equity swap”).
swap”)
There are also exit considerations for grant funding. Som
Somee social investor fund a significant
share of the social enterprise’s operations and aan exit can lead to funding issues.
issues A social
investor can fund 10% of the total budget or take over part of the overhead costs for a given
period of time. When the social investor stops his grant funding after a few years the social
enterprise either needs a follow
follow-up
up financing or should have reached financial self- self
sustainability.
18
4 Appendix
4.1 Social Capital Markets
Value Banks
Value banks have the same role as commercial banks in the traditional capital markets. They
also take deposits from savers and give loans to individuals and companies. However, those
banks focus on the social sector and have therefore a better understanding of the business
models and the specific need 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 39.
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 46.
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 49.
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
3
Due to strict regulatory requirements it is not yet clear if and when the first social stock exchange will start trading.
19
John (2006) defines this approach as having the following characteristics:
- 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 37.
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 take over this role. They publish research reports on different sectors
and advise funders which organizations to support. An overview of those consultancies can be
found in chapter 4.10 ”Funding Consultancies” on page 48.
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
third-party
party beneficiaries or
public authorities. External financing is either used to cover negative operating cash flows or
to finance long-term
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 et al. (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 has only to be paid back 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 instrume
instruments
nts 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 et al. (2011)

To conclude, the following table shows the description and implications of the different
financing instruments.
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.
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
- Water +44 20 7016 4300
the ‘bottom of the pyramid’ in India, with an
emphasis on agriculture, energy and livelihoods. anna.mustoe@riantacapital.com
www.arthaplatform.com
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
27
Instruments Focus
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
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
28
Instruments Focus
Convivatus Social Capital
- Compatibility of family Schnabelweg 60
- Debt capital and work 8832 Wilen
Convivatus Social Capital provides uccessful 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.
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
29
Instruments Focus
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
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
30
Instruments Focus
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
- 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
IGNIA is a Mexian venture capital investment IGNIA Partners, LLC

firm that supports the founding and expansion of Av. Ricardo Margáin 575
high growth social enterprises that serve the base Parque Corporativo Santa
of the socio-economic pyramid. By providing - Debt capital Engracia
effective responses to the enormously underserved Latin America - Base of the Pyramid
- Equity capital San Pedro Garza García, N.L.
needs of low income populations, both as México 66267
consumers as well as active participants in +52 81 8000 7165
productive value chains, IGNIA empowers www.ignia.com.mx
entrepreneurship and generates social impact while
creating attractive financial returns for its
investors.
31
Instruments Focus
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.
LGT Venture Philanthropy
- Relief of human
Africa Städtle 28
suffering
- Grants China 9490 Vaduz
- Education
The objective of LGT Venture Philanthropy is to - Debt capital India Principality of Liechtenstein
- Creation of
raise the sustainable quality of life of less - Equity capital Southeast Asia +41 44250 8281
sustainable
advantaged people especially those in the Latin America lgt.vp@lgt.com
livelihoods
developing world www.lgt.com
32
Instruments Focus
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’.
The One Foundation
35 Barrow Street
- Poverty & disadvantage
The One Foundation aims to improve the life Dublin 4
Ireland - Mental health
chances of disadvantaged children and young - Grants Ireland
Asia - Integration of
people. The One Foundation is a private +353 1 8088800
minorities
philanthropic fund that will spend down its capital 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
33
Instruments Focus
Private Equity Foundation

2 Bath Place, Rivington Street,
The Private Equity Foundation’s core mission is to
London EC2A 3DB
reduce the number of young people not in education, - Children and young
- Grants Europe United Kingdom
employment or training (NEET) so they can reach their people
+44 845 838 7330
full potential. We recognise that young people face a
info@privateequityfoundation.org
journey from birthplace to workplace with numerous
www.privateequityfoundation.org
obstacles preventing them reaching their full potential.
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.
34
Instruments Focus
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
Social Investors Club

Social Investors Club is a social investment company - Debt capital 29/F, 8 Wyndham Street
established in Hong Kong in 2010. Formed by 10 - Equity capital Central, Hong Kong
Hong Kong - No focus
socially-minded investors with diverse business, - Mezzanine +852 21568876
finance, social service and academia backgrounds, SIC capital info@socialinvestorsclub.com
invests in social enterprises driven by clearly defined www.socialinvestorsclub.com
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
1.6 billion people without access to electricity. More - Debt capital
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.
35
Instruments Focus
Social Venture Fund

Sendlingerstr. 7
- Debt capital
80331 Munich
The Social Venture Fund invests in social businesses, - Equity capital
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
36
4.7 Social Investors with Focus on Microfinance

Instruments Focus
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).
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
37
Instruments Focus
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
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.
38
Instruments Focus
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.
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
39
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.
40
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
41
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
42
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

new resource bank’s mission is to advance
405 Howard Street, Suite 110
sustainability with everything we do—the loans we make,
San Francisco, CA 94105
the way we operate, and our commitment to putting United States - No focus
United States of America
deposits to work for good. To us, banking isn’t just a
+1 415 995 8100
service—it’s a way to create a better world. We manage
ggroff@newresourcebank.com
the financial, environmental, and social impacts of our
www.newresourcebank.com
activities to promote the global well-being of future
generations.
43
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.
- 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
44
XacBank
Prime Minister Amar's Street
Xac Bank aims to contribute to sustainable development
Sukhbaatar district
of Mongolia that can come only from educated and
- Education P.O.Box-46/721
skilled people and competitive and dynamic businesses Mongolia
- Environment Ulaanbaatar – 14200
concerned equally about Planet, People, and Profit.
Mongolia
The Bank will provide equitable access to transparent,
+97611 318185
reliable and responsive banking products and services to
www.xacbank.mn
the Bank's clients, including its traditional Micro-
entrepreneurs as well as Small and Medium businesses.
Table 4: Value Banks
Source: Websites, Global Alliance for Banking on Values
45
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
46
Social Investment Advisory with short Mission Statement Geographical Focus Main Sector Focus Contact Details
Root Capital
955 Massachusetts Ave.
5th floor
root capital envision thriving rural communities where Latin America Cambridge, MA 02139
- Small grassroots businesses
small-scale producers have access to markets and Africa United States of America
financial services to lift themselves out of poverty while +1 617 661 5792
strengthening the health of our planet. finance@rootcapital.org
www.rootcapital.org
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
47
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
48
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
49
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
51
6 Index
Acumen Fund ................................................ 27 LGT Venture Philanthropy ........................... 32
Alternative Bank Schweiz ............................. 40 Light Years IP ............................................... 46
Artha .............................................................. 27 Merkur Cooperative Bank ............................ 42
ASN-Novib Fund .......................................... 37 Mezzanine capital ......................................... 22
Auridis ........................................................... 27 Mibanco ........................................................ 43
avant-gardist .................................................. 46 Negotiating the financing terms.................... 13
Bamboo Finance ............................................ 46 New Philanthropy Capital............................. 48
Banca Popolare Etica..................................... 40 new resource bank ........................................ 43
Banco Sol ...................................................... 41 NExt SSE ...................................................... 49
BonVenture ................................................... 28 noaber Foundation ........................................ 33
Brac Bank ...................................................... 41 Oikocredit ..................................................... 38
CAF Venturesome ......................................... 28 Omidyar-Tufts Microfinance Fund............... 39
Charity Bank ................................................. 41 OneCalifornia Bank ...................................... 44
Children’s Investment Fund Foundation ....... 28 Performance measurement............................ 16
Convertible grants ......................................... 22 PHINEO........................................................ 48
Convivatus Social Capital ............................. 29 PhiTrust ........................................................ 33
Core Innovation Capital ................................ 29 Private Equity Foundation ............................ 34
Cultura Bank ................................................. 42 Recoverable grants........................................ 22
d.o.b foundation............................................. 29 REDF ............................................................ 34
Debt capital ................................................... 22 responsAbility ............................................... 39
Dexia Microcredit Fund ................................ 37 Revenue share agreements ............................ 22
Dual Return Fund .......................................... 37 Robin Hood................................................... 35
Due diligence................................................. 11 root capital .................................................... 47
EH Foundation .............................................. 30 Screening ...................................................... 11
Equity capital................................................. 22 Selection process .......................................... 11
European Fund for Southeast Europe ............ 38 SNS Institutional Microfinance Fund ........... 39
Exit ................................................................ 18 Social capital markets ..................................... 6
External financing ......................................... 21 Social Finance............................................... 47
Ferd Social Entrepreneurs ............................. 30 Social investment advisors ........................... 19
Financing instruments ............................. 18, 23 Social investment funds ................................ 19
Fondation Demeter .................................. 30, 38 Social Investors Club .................................... 35
Fondazione Oliver Twist Onlus .................... 31 Social Stock Exchange London .................... 49
Ford Foundation ............................................ 31 Social stock exchanges ................................. 19
Forgivable loans ............................................ 22 Social Venture Fund ..................................... 36
Funding consultancies ................................... 20 Solar for All .................................................. 35
GLS Bank ...................................................... 42 Task force members...................................... 50
Grants ............................................................ 22 The One Foundation ..................................... 33
Hybrid capital ................................................ 22 Total Impact Advisor .................................... 47
IGNIA............................................................ 31 Triodos Bank ................................................ 44
Impact Investment Exchange Asia ................ 49 Value banks .................................................. 19
Impetus Trust................................................. 32 Vancity.......................................................... 44
Inspiring Scotland ......................................... 32 Venture philanthropy funds .......................... 19
Internal financing .......................................... 21 Xac Bank ...................................................... 45
52
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
53

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Social Investment Manual

A Guide for Social Entrepreneurs

Ann-Kristin Achleitner led by Mirjam Schöning

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

Figure 2 Classification of available financing instruments

Illustration based on Achleitner

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

Source: Achleitner & Spiess-Knafl

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 et al. (2011)

Figure 7 Financing instruments

Source: Achleitner et al. (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)

Main Financing Geographical

The Children’s Investment Fund

Core Innovation Capital

IGNIA is a Mexian venture capital investment IGNIA Partners, LLC

Sales

The organization was established in . The headquarter is based in

, Chairman, role outside of social enterprise

, Executive Director