SoFi 101: Understanding social finance

• Main Authors: Petroske, Christian, Parzhuber, Florian, Jeong, Haneol, Kinsella, John, Murakami, Maaya, Laferriere, Mitchell, Cordelle, Remi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2017
• Subjects: Finance and Financial Management; Work, Economy and Organizations
• Online Access: https://ink.library.smu.edu.sg/lien_research/152; https://ink.library.smu.edu.sg/context/lien_research/article/1151/viewcontent/SOCFI.pdf
• Institution: Singapore Management University

What is social finance? Rachel Kalbfleisch of the International Development Research Centre (IDRC) defines it as a collection of approaches to managing money that create value for society or the environment, often while producing a financial return,1 while the MaRS Centre for Impact Investing calls it “an approach to managing money to solve societal challenges”.2 In other words, social finance is a movement that covers various ways of using finance—via socially responsible investments, micro-loans, community investments, and so on—to achieve a social or environmental impact. Who is involved in this process? While charities, socially driven businesses and governments all work towards creating positive social change, those who finance them are the ones facilitating the creation of social and environmental value (hereafter “social value”). These funders are thus considered to be practising social finance.