Defining social finance

Hello readers! I have lots to share with you on my first week of action but first I feel I should define social finance as it relates to my transition.

Social Finance encompasses not just hard-core investing and lending but also providing intermediary services such as consulting or financial planning or advocacy. Social finance is not just a sector to me, it’s a movement of people who are saying that the banking system is broken and we have better ideas about how money should be used and where money should be focused. It’s not a trend, it’s the future of finance, which is why you have some of the big banks and money centers actively getting involved in social finance.  Some examples:

1. JP Morgan teaming up with the Nature Conservancy to found NatureVest, a conservation finance fund.

2. American Express sponsoring the movie Spent to highlight the plight of financial exclusion in America (while also promoting American Express Ventures.)

3. Wells Fargo launching its own start-up accelerator with access to VCs and mentors.

I am thrilled to see many financial institutions getting seriously involved in this space and using their in-house knowledge base  to lead innovation or encourage innovation. It shows that the conversation is moving from passive to active Corporate Social Responsibility. My only concern is that if these initiatives don’t take-off or end up being far more riskier then first estimated, that these firms will be revert back to passive CSR and relying on their foundations to grant money.

But there are also financial institutions that have been active for YEARS and the new players would do well to look to these organizations for advice and guidance:

1. Deutsche Bank and its many initiatives in loans, grants, social venture funds, microfinance and investments.

2. RSF Social Finance has been providing investments, loans and seed funds to social entrepreneurs for 30 years!

3. Community Development Venture Capital Alliance (CDVCA) has  been advocating on behalf of its members (CDVC funds) for over twenty years and runs its own impact investing fund.

These organizations are leaders in the sector as they have been involved since before it was popular. One organization that should be mentioned also is the Non-Profit Finance Fund, which is an amazing organization and actively involved in Pay-for-success programs and social impact bonds, which is the innovative financing, with which I would like to be involved.

There are many options for people like me who want to use their strong finance skills to do good and be impactful in the wider world. But this is only a small part of the social impact sector. The best way to decide where your skill-set will best fit is through volunteering. That’s what I plan to do. I will cover this and my first steps in my next blog post.



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