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Symposium 2011

Background Paper - The Future of Funding for Social Enterprises

The Challenge

The global financial crisis has raised fundamental questions about capitalism. Questions of morals in society and business have regained momentum, demanding more acceptance of responsibility for a sus ...

The global financial crisis has raised fundamental questions about capitalism. Questions of morals in society and business have regained momentum, demanding more acceptance of responsibility for a sustainable, value-oriented society, particularly from business. With this in mind, the growing social business sector might be one of many solutions to the transformation of the capitalist system.

The funding of social enterprises has undergone significant transformation over the last 20 years shifting from direct grants provided by government and philanthropic foundation sources, to earned revenues from a broader range of sources.

In addition, the global economic crisis in 2008 has created new challenges and opportunities for the social enterprise sector. Fiscal tightening by traditional social funding sources was exacerbated by investor wariness of investments without clear reporting transparency and impact accountability. However, the high volatility of conventional markets has led investors to consider diversification strategies and counter‐cyclical investments, benefiting many types of social enterprise (e.g. microfinance).

This paper describes the challenges and opportunities for funding faced by the social enterprise sector post‐economic crisis. It also proposes recommendations for social enterprise managers and policy makers that are intended to increase the pool of funding available to the social enterprise sector.