The lack of investment capital for social enterprises holds back the growth of this blossoming sector.
As much as social enterprises would like to set themselves apart from the giving model of traditional philanthropy, the lack of a pure profit motive when solving societal problems hampers the resourcing of new projects. In our organization, Belay Enterprises, we seek to create ventures that employ and job train individuals rebuilding lives from addiction, homelessness and prison. We are constantly uncovering great new potential projects that are only limited by our ability to fund their start-up. If a consistent social capital market were developed, it could greatly benefit our efforts. Unfortunately, that is easier said than done because social change doesn't easily pay investment dividends.
So it's with great interest that I am watching the development of social impact funds by investment banks like Goldman Sachs and Morgan Stanley. They are built on the assumption that if investments are made in projects that seek to reduce recidivism or increase child education outcomes, they will pay off in the long run by reductions in societal costs from negative outcomes. There is a great article in the Washington Post that explores the growth of these "pay for success" social impact bonds.
I hope these innovative programs will continue to grow and quickly be adapted to include organic grassroots community organizations.