If your organisation is looking for funding to scale its impact, but unsure if social impact financing is the right fit, this guide is for you. Not all social finance options are the same, and choosing the right investment partner is key to aligning with your mission and long-term goals.
What is social impact financing?
Social impact financing provides funding to organisations that generate positive social or environmental outcomes. This funding – often in the form of loans, equity investments, or quasi-equity – enables organisations to grow, through areas like hiring staff, purchasing property, or developing new technology.
Unlike grants, social impact financing is repayable. This means your organisation must be confident in generating enough additional revenue to repay the investment, often with interest or another form of return.
The right reasons
- Scaling impact: Expanding your services and/or products to help more people.
- Sustainable growth: Building a long-term financial strategy beyond grants and donations.
- Strategic support: Many impact investors offer guidance on governance, marketing, and operations, growth, customer and product market fit.
The wrong reasons
- Short-term cash flow issues: If you’re struggling to cover everyday costs, repayable finance may not be the best solution.
- Lack of revenue generation: If your organisation doesn’t have a clear plan for repaying the investment, grants might be a better option.
What do social impact investors look for?
Unlike traditional investors focused solely on financial returns, social impact investors also require evidence of positive social change. You may need to report on metrics such as lives improved, jobs created, or social mobility enhancements. However, many investors, including Big Issue Invest, provide support to help you track and communicate your impact effectively.
Types of social impact financing
At Big Issue Invest, we offer a range of financing options tailored to different organisational needs:
- Investment size: From Growth stage loans of £20,000-400,000 to property-backed debt finance between £1m-4m
- Secured and Unsecured Loans: Repayable over 1-7-plus years with flexible terms.
- Equity Investments: Typically long-term (5-plus years), often repaid when your organisation scales or sells shares.
- Quasi-Equity Investments: Hybrid options with flexible repayments based on your financial performance, usually over 5-7 years.
If you’re unsure which type of finance is best for you, you can speak with an investment manager to explore your options. Get in touch here.
