Glossary
A social enterprise is an organization that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders. Social enterprises can be structured as a for-profit, non-profit, or other new business form such as a B-Corporation.
Social entrepreneurship is the process of pursuing innovative solutions to social problems. More specifically, social entrepreneurs adopt a mission to create and sustain social value.
Social finance is an approach to managing money that delivers a social dividend and an economic return.
In business and government policy, social impact refers to how an organization's actions affect its surrounding community.
Social Impact Bonds (SIB) are also known as Pay for Performance Bonds or Pay for Success (PFS) Bonds. A social impact bond is a new type of financing that includes a contract where payment from a government agency is tied solely to outcomes. Generally the public agency has few other controls or restrictions on the provider. As currently deployed and designed, SIBs or PFS projects typically involve three parties: the public agency payer contracting with a third party intermediary for payment based on outcomes. The intermediary contracts with a nonprofit service provider to deliver services and raises funds from investors. The intermediary contracts with the service provider with payment upfront for delivery of services and pays an incentive or bonus payment based on outcomes. The use of the word "bond" is actually a misnomer in this structure. The investment has more in common with venture capital that has a social value.
Another term for mission investment, any investment made with the expectation of both achieving social impact and recovering at least a portion of principal; and possibly earning interest or appreciating in value. Social investments can be debt or equity, can be made using program or endowment funds, and can achieve a range of financial returns, both at market or below market levels. Mission or social investments include program-related investments and mission-related investments.
Also known as sustainable, socially conscious, "green" or ethical investing, SRI is any investment strategy which seeks to consider both financial return and social good. In general, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity.
In a development budget, fees (developer, architect, legal and others), taxes, insurance and other costs which are additional to acquisition and construction costs.
The difference between the interest rate charged for a loan and the lender's cost of funds. For example, if a CDFI charges 10% for business loans that are funded with a 3% program related investment, the spread is 7%. However, because there also is a cost to underwriting and administering a loan, spread is not equivalent to profit.
Sustainable and responsible investment
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