The hitchhiker’s guide to the social finance galaxy

You want to travel the social finance universe but don’t know how to prepare? Don’t panic. A very basic reading list by FASE gets you up to speed without the need to engage with Deep Thought.

If you want to discover the territory of social finance, you don’t have to listen to heavy and nerve-wrecking Vogon poetry. There is a wealth of articles and papers out there, all well below ten pages or less than thirty minutes of your attention. So why not lean back comfortably and allow the infinite improbability drive to boost your knowledge? It doesn’t matter whether you are on the supply or demand side, a future impact investor or a social organization looking for money. The only thing you should be aware of: The ultimate answer to all your questions of Life, the Universe, and Everything is definitely NOT “42”.

“Making Sense of the Many Kinds of Impact Investing”

This is a real good takeoff for those interested in the capital supply side. A multiverse of investment opportunities is awaiting you out there and you can easily get lost – not only in translation. Brian Trelstad, partner at Bridges Ventures, does a great job in mapping this colorful impact investing multiverse for you. Finally, impact is the new fourth dimension to the 3D-space that every investor is already familiar with (just for the record: (1) Risk, (2) Return and (3) Liquidity). So it’s maybe worth knowing something about the different kinds of ‘impact species’ you will encounter on your trip. This helps you to stay safe and satisfy your travel bug.

“Achieving Impact for Impact Investing”

No, we’re not biased at all, but this is a good read if you want to understand the ecosystem of social finance and how things intertwine. Based on the German market, FASE, Ashoka and McKinsey investigate how to establish a hyperspatial impact express route in developed countries. No bypass possible: Actors need to take transformative action to remove the obstacles. And in order to do so, collaboration is key. So how about you: Are you interested in being part of this changemaking route? Or do you rather want to understand what this ‘hybrid finance’ buzz is all about? Take a quick look out of your spaceship window. Some examples are there for illustration, too.

“How Do We Scale Impact Investing?”

Unlike Arthur Dent, the hero in Douglas Adam’s novel, your trip doesn’t have to start too abruptly. Fran Seegull, CEO of ImpactAssets, gives you the big picture. She illustrates the key roles and styles in the universe and explains which measures need to be taken to make the impact galaxy expand. Players mentioned are mainly from planet “USA”, but the insights are spot on. So better take action before the earth below your feet gets demolished (we don’t need Vogons to do this job). Just as Fran writes:

“Dwindling natural resources, increasing drought and climate-related disasters, and insufficient access to energy and sanitation are omnipresent. In order to meet the demand of a fast-growing population, food production must increase by 70 percent. The status quo of how capital is currently deployed can no longer support this changing world”.

Although her article is from early 2016, it couldn’t be more spot-on today (looking at you, “Fridays for Future” folks).

“Everyone an Impact Investor”

Ok, so you’re not Croesus: you can’t afford a luxury trip to the impact galaxy. Fair enough. But don’t get depressed like Marvin, the robot. And don’t use it as an excuse, either. Laura Kromminga from Ashoka’s Hybrid Finance Initiative explains how a low budget trip to the impact investing galaxy comes within reach. ‘Everyone an impact investor’: it starts with 5 Euro, a change of your bank account or a click on a ‘donate’ button. Go for it – there is no second earth! If you’re curious about an impact version of the wildly popular Tripadvisor, there you go.

“Social Investment – Tools for Success: doing the right things and doing them right”

Time to change the spaceship: Let’s move to the demand side of the galaxy. If you are a social organization in need for money, you probably want to know how to reach Magrathea, the richest planet in the Verse. What do you need to do to get investment from there? And is this the right thing for you after all? Not every spaceship is the “Heart of Gold”, so mind the gap. This guide by Cass Business School brings you up to speed, especially if you’re a nonprofit wishing to develop to a social enterprise. As the guide rightly points out, there is a change of mindset involved – and quite some preparation, too. Although the links provided are mainly for the UK’s social galaxy, there’s a nice toolkit to prepare your venture into far space.

“How to Finance a Social Enterprise”

Still too many pages to read? Here’s to the hasty hitchhiker: FASE provides you with a map of the basic financing options. It all depends on your business model, of course: how do you provide products and services to target groups and beneficiaries? Do you create income while doing so and if so, from whom and how much? Naturally, there is much more to it, but if you’re the very impatient kind, this is as quick and easy as it can get.

“So Long, and Thanks for All the Fish”

Enough material for you to bite during your trip? Or do you want more? If you’re a social venture and strive to engage in Deep Thought, here’s a great online course you can enroll in on +Acumen. It will “teach nonprofit organizations, social entrepreneurs, corporate entrepreneurs and social change leaders how to use financial modeling and creative approaches to market-based funding to scale the impact of their work”.  Some room left for a bite-size social finance dessert? This free, self-paced course teaches you how to access impact investors step by step. (free registration required first at www.social-finance.academy.org) Bon appetit! We’ll meet at the Restaurant at the End of the Universe then.

So much for now in this chapter of our hitchhiker’s guide to the social finance galaxy. Stay tuned for more to come. And whatever you may choose, please enjoy your trip! Don’t just move “small green pieces of paper”:
“This planet has – or rather had – a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn’t the small green pieces of paper that were unhappy.”
Douglas Adams, The Hitchhiker’s Guide to the Galaxy