Financial market transformations for investing in social impact

Abstract

Abstract While social enterprises are a key component of the wider social economy in Europe, they face the challenge of acquiring sufficient financial resources to help them develop their businesses and scale their impact. This chapter explores how the new field of impact investment can contribute to the growth of social enterprises across Europe. The chapter defines impact investment and discusses how developments in the public, private, and nonprofit sectors are driving the growth of the market. A ‘Spectrum of Impact Investment’ is introduced to map the variety of capital deployed for social impact, the size of the market, and expected financial returns. Following this broad overview, the chapter reflects on policy innovations in the United Kingdom impact investment market to inform policy recommendations for the European context. The policy recommendations are aimed to address gaps in the existing market infrastructure in terms of the supply side, the demand side, and intermediation.