Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
3.2 Progress in the social impact investment market will depend on different stakeholders working
together to build critical mass by developing the market, tools and practice. Those stakeholders include
investors, investees and intermediaries as well as policy makers, all with varying interests and motivations.
Building trust is important, and market transparency is essential to building this trust (IIPC, 2014).
3.2. Social needs
3.3 Social impact investment starts with the social need being addressed. These can cover a wide
range of social need areas such as ageing, disability, health, children and families, affordable housing,
unemployment, etc. The types of beneficiaries of social impact investment can also vary. These issues are
described in further detail in Chapter 4. In addition, the social context and social systems within a country
can vary dramatically and have a huge impact on the potential opportunities for SII. This is discussed in
detail in Chapter 5.
3.3. Demand-side
3.4 The key drivers in addressing social needs are the service delivery organisations. These
organisations can include community organisations, charities or non-profit organisations, social
enterprises, social businesses, and social impact-driven businesses. In some countries, only non-profit
organisations are considered “social”, however rules are changing to include for-profits with a targeted
social purpose.
3.5 Demand-side actors seek to find new models to deliver social impact and create new markets
through their social ventures (HM Government 2012). The term “social enterprise” began gaining visibility
in the 1990s (OECD, 2000) as an innovative business model for meeting social and economic objectives,
that embodies constraints on the distribution of profits and/or assets, however, the organisational structures
and legal forms vary widely across countries (Noya, 2009).
3.6 Social delivery organisations operate in a wide range of geographies and sectors and therefore
have varying financing needs. The development of financial instruments across the full risk/return
spectrum is needed to meet the varying needs of these enterprises. However, this requires a better
understanding of which financial instrument and funding model would be most effective for social
ventures at various stages of development (Evenett and Richter, 2013). In addition, some of these
organizations are becoming hybrids (Glänzel et al., 2013) and therefore are pursuing a mix of funding
approaches. The OECD CFE\LEED has worked extensively on social enterprises, particularly at the local
level (e.g. OECD, 2013b).
24 © OECD 2015