Financing Social Enterprises

Abstract

In this Special Issue of the Entrepreneurship Research Journal, we examine emerging and evolving strategies and tools for financing social enterprises. This is a very young subfield of social entrepreneurship; one that has been dominated by practitioners and only recently has attracted scholarly interest. However, it is a vital topic because of the need for more and better resources to bring scale to the pursuit of social and/or environmental mission. It is an immensely fertile field for research. Dees, Emerson, and Economy (2001) remind us that financing for social entrepreneurship should be driven by the human and physical resources required to deliver on the social value proposition (SVP) of the enterprise, which, in turn, must be guided by the activities necessary to accomplish the mission. As SVPs become more ambitious and activities more sophisticated, more capital is required in forms that are appropriate to the organizational structure and life cycle stage of the enterprise. Traditional forms of financing for social entrepreneurship are no longer adequate to the task. They are often short-term, categorical, and transactional in nature (Wei-Skillern et al. 2007), when what is needed are financial resources that free the social entrepreneur to focus on mission achievement (not fundraising) at a scale that yields transformation. This has led to experimentation that has pushed the boundaries of traditional financing, such as Crowdfunding and program-related investments. However, even this has not proved to be enough. The newest idea in good currency in the social entrepreneurship financing arena is social impact investment, which combines financial investment and social and/or environmental impact. Social impact investors seek both financial