Social Enterprise And Funding Sources

A lot of people think that is extremely easy to start a business and get a grant from the Government to run it. Of course, a good idea and concept will always get you funding, but traditional companies usually have more paper work to do, as well as other legal regulations, before someone grants them a loan or similar source. Unlike the traditional business companies, social enterprises have a bit changed structure which enables these to obtain various types of funding in a form of a grant, investment or even mix of both much easier. These hybrid companies are easier to handle from the legal side and that is exactly why people choose the social enterprise when looking for a loan. Here are the easiest forms you can get if you are planning to invest or start a company.

Grant funding

One of the easiest ways is getting funds through the Government bodies or charitable ones, where you are not obliged to financial return. Instead, the granting body invests in the outcome of the enterprise who took the funds. Beside Government bodies, you can apply for such a help at private foundations that offer special grants to the future social enterprises. This is usually, though not always, directed towards smaller companies which are not likely to have a huge profit but would rather create a social impact on the society, in some way. Do not mix this with impact investing.

Investment funding

Another way of getting money for your company is the popular investment funding, which is one of the most favorite ways to finance a startup. If a company you are planning to run is able, according to the predictions and precise reviews, to generate a lot of profit, it becomes liable for debt investment or funding. That means you can obtain funds from: wealthy individuals who are looking for a good and prosperous one, companies that are specialized in small-money startup investing, and companies that are able to invest larger amounts of money in the companies that are just starting out.

Impact investing

The concept of impact investing has emerged on the scene once the Internet gained a lot of popularity, where the social impact could be created much faster. Of course, not that this did not exist before, it is rather popularized after 2010.and became one of the best types of investing. The main concept lays in the idea of investing into a company, organization or fund where the intention is directed towards the generating social and environmental impact, beside the financial return. One good example is a vaccine for infectious disease – it generates a lot of money, plus it has an enormous impact on the society.

Social impact bond

Social impact bond is maybe the best way of investing as you invest into a Government’s project, where you receive money in return when a project becomes successful in its expected social impact and outcome. In more than 90% of the cases, social impact bond is connected to Government projects that “solve” a certain social problem by receiving funds. Later on, whoever finances the project that solved the social problem receives fund return.