More about social impact investments
Social impact investments are methods to ensure social impact and good business. At its core is the strong partnership between provider, supplier and investor.
Social impact investments can create new ways to address societal challenges in a future where there is a pressure on public spending. The Danish welfare society faces a number of major challenges, especially in the social area, where costs are very high. If we also look at demographic trends, it is clear that we as a society must be able to support an ageing population, while too many citizens live a life on the margins of society.
This naturally leads to a gap between income and expenses, which puts pressure on the public budgets. If we continue as now, we will eventually have poor and ineffective social efforts.
The method
A social impact investment is a partnership between a provider, a supplier and an investor who agree to solve a social challenge:
- The provider is most often a municipality or a region that wants to pay for a given impact. The impact may be, for example, that a larger proportion of citizens with mental difficulties achieves a lasting place on the labour market compared to today.
- The supplier, perhaps a social enterprise, is responsible for delivering the effect via a specific program or effort for the citizens. The supplier should only measure the effect and not the specific activities.
- The investor assumes the financial risk by ensuring the necessary liquidity before, during and after the effort until the provider pays for the total impact.
Social impact investments are growing rapidly, and more than 130 have now been developed worldwide. Experience from abroad shows that developing new solutions and partnerships can contribute to creating long-term change through innovation, increased resources and drive. Social impact investments one of these new and promising solutions.
See how to work with social impact investments around the world: https://sibdatabase.socialfinance.org.uk/
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