Gianoncelli, A., & Boiardi, P. (2017). Financing for Social Impact: The key role of tailored financing and hybrid finance. EVPA: Click here to read the report.
This is a report about social impact and how to maximise it. It is not a technical report on finance, financial instruments or financing mechanisms. It is not aimed at analysing in-depth all the different financing structures used and built up to support social purpose organisations. It is about how funding can be shaped in such a way that it is aligned with the purpose of the investee, and how it thus can help both the venture philanthropy organisation/the social investor1 and the social purpose organisations2 maximise their impact. This report is also about how different actors with different risk/return/impact profiles can cooperate in the VP/SI space to leverage each other’s resources and expertise.
The report is divided into two streams: the first dealing with tailored financing and the second dealing with hybrid finance.
Tailored financing is the process through which a venture philanthropy organisation or a social investor finds the most suitable financial instrument (FI) to support a social purpose organisation choosing from the range of financial instruments available (grant, debt, equity, and hybrid financial instruments).
Hybrid finance can be defined as the allocation of financial resources to impact-oriented investments combining different types of financial instruments and different types of risk/return/impact profiles of capital providers.