A growing number of charities and social enterprises delivering services for children and young people are beginning to use – or at least thinking about using – social investment as a different tool for financing their work.

But this is a new type of finance, and lots of organisations are confused about what social investment is, how they could use it, and how to go about accessing it.

This briefing provides a basic introduction to social investment and the types of products that are available. It is aimed at readers with little or no knowledge of this topic, to help you think about whether your organisation or project might be suitable for social investment. It also provides examples of how other organisations delivering services for children and young people are using social investment, the types of products available and where to find out more.

Social investment is the use of repayable finance to achieve a social as well as a financial return. This means that the investor will expect their money back (usually with a financial return on top), but the investor is also interested in the social impact that is created by the work that the charity or social enterprises is doing.

Social investment won’t be right for every organisation or project. It should be considered alongside other options, such as bank loans, grants and raising funds from donors.

Investments must be repaid, so your project or activity needs to generate enough of a surplus to generate a return for the investor and support your own sustainability, as well as having a social impact. The exact shape of this return will vary depending on the type of investment.

For example:

  • a loan to develop an organisation could enable you to develop new services or develop trading activities which will generate additional revenues for you, and allow you to pay back the loan
  • investment in property with a rental income providing the return
  • government social impact bonds pay financial returns to investors based on the extent that providers’ outcomes have resulted in savings to the public purse

There are different:

  • types of social investment solutions (e.g. bonds, loans
  • ways of accessing investment (e.g. from established funds, directly from individuals, and government programmes that are designed to use investment)
  • ways to repay investment (e.g. rental income, savings to public services).

Download the Guide to Social Investment in Children and Young People Services