Over our 20 years in the business did Social Investment Banking Change?
It has been seen that there is a huge gap between the availability of strategic financial support for people working in upliftment of society as social enterprise. There is also a dearth of financial institutes to facilitate and advice in this sector as opposed to other sectors like Investment bankers, incubator funds or debt funds etc.
The following fields are where social sector work is in progress:-
- Housing –better and affordable
- Health – community, rural, research
- Small scale indigenous businesses
- Aged Care
- Child care
- Care for disabled
- Employment services
- Justice – advocacy, rehabilitation, diversion
It has been observed that there are obstructions and shortcomings in current financial system for the requirement of non-profit organisations working in the above mentioned fields. The main reason for same is that the social enterprises are comparatively striking lesser investments because of unstable revenue stream, non availability of any collateral security, non standardised format of financial reporting and value addition measurement etc.
As far as financial institutes are concerned, their purpose of being institutionalised doesn’t support the needs of the social sector. Complexities of laws for the formation of trust and society etc for social work are very cumbersome. Investment in social sector is a taboo because it is unable to fulfil the main aim of investment, that is, better and profitable returns. Also charities and not for profit organisation have risk hesitation for raising capital as debt and as per norms lending is done only on the basis of mortgage security.
When we work in entrepreneurial ventures which are innovative solutions for social sector, we know that the conventional routes for raising finances are not available. There are very limited funding options available for the enterprises in the social sector to help them grow up to self sustaining mode or to be proven in financial jargons.
Having said that, in the last two decades many organisations and social investment bankers have come up, which provide advice and resources to social sector entities and help them understand the impact of their actions on the society. The social investment bankers work extensively to raise financial intelligence on genuine social issues.