A new model for supporting social enterprise through sustainable investment

Abstract

Purpose

To show how social enterprises can take advantage of the growing ethical awareness of financial institutions to finance their work whilst remaining true to their social principles.

Design/methodology/approach

The concept of financial intermediation and the growing ethical dimension of financial institutions are discussed to examine the evolving role of ethics within financial intermediation and the opportunities these offer to social enterprises which have hitherto been wary of such finance on principle. Focuses on the fact that many depositors and investors are willing to sacrifice financial return for social results. Reports results of the study, which literature searches and other methods and presents information based on case studies of eight financial intermediaries that provide services to social enterprises and have a strong concern for ethics.

Findings

The case studies comprise: Aston Reinvestment Trust (ART), an industrial and provident society; Charity Bank, an FSA regulated bank with a national lending scale; Derby Loans, an industrial and provident society (IPS) and a community development finance institution (CDFI); The Ecology Building Society (EBS), an FSA‐regulated building society with a national lending scale; Industrial Common Ownership Finance (ICOF), a public company limited by guarantee with a national lending scale; London Rebuilding Society (LRS), an IPS with a local lending scale, with borrowers having to be located in London; Triodos Bank, a regulated bank with a national lending scale; and Ulster Community Investment Trust (UCIT), an IPS with a local lending scale limited to specified geographical areas. Concludes that several financial intermediaries now exist that are willing to provide short and long term finance to social enterprises.

Originality/value

Provides valuable information and encouragement for social enterprises seeking finance for their activities.

Citation

Edery, Y. (2006), "A new model for supporting social enterprise through sustainable investment", Social Enterprise Journal, Vol. 2 No. 1, pp. 82-100. https://doi.org/10.1108/17508610680000715