Social Shares – Risk Finance for Social Enterprises and Charities

We funded this Flip Finance research to establish the extent to which risk finance (quasi equity) is being used in social investment, to investigate the experiences of those who had used it and to determine whether there is a need for greater availability within the sector, as well as to consider alternative models of risk-finance which could be tested. 

The research found that:

• Very few social investments to date have made use of any quasi equity (QE) (roughly 1-2%)
• There is some evidence of demand, and of the suitability of QE for the needs of a range of charities and social enterprises
• Investors perceive QE as complicated and expensive, potential investees are either unaware of such products, or find them confusing.

and developed five alternative models which are outlined in the report. 

We are utilising this research with regard to our Growth Fund to consider if/ how QE could be used to meet demand within this programme under our New Approaches theme (more information on our Growth Fund and its themes can be found here).