New research from Shift, CAF Venturesome, Unltd and Esmée Fairbairn Foundation has revealed that the voluntary, community and social enterprise (VCSE) sector’s need for equity and equity-like funding is three times greater than current demand.
A number of GMCVO's social investees participated in the research which has found that almost one in five (18%) social purpose organisations surveyed need this type of funding, but only one third of this group actually demand it. Barriers include low awareness and understanding of equity and equity-like funding.
The report highlights the need for ‘patient, risk-bearing capital’ for social impact innovation, compared to grants and debt funding. This type of funding is made by investors who are willing to share risk with innovators, accepting that not all ideas work – some may fail, some may make a loss, and some may take a long time to develop into viable propositions. For those ideas that do work, the financial return and impact can be exponential.
The researchers call for efforts to tackle barriers on the demand and supply side, and a better understanding how this type of funding can be best deployed for social impact.
You can read the full report here.