Funding social Economy Entities: from traditional to innovative financial mechanisms

Abstract

The centrality of the social mission in social entities has implications for both the economic and funding relations. As a type of organisation deeply rooted in achieving a social objective, these organisations access a multitude of financial resources. Social economy organisations need to acquire and combine the necessary resources and manage relationships with external resource providers to achieve their social mission. Social economy entities finance is nowadays more complex and articulated than years ago. The landscape and the resources available have changed and social enterprises are transformed and raise financing from many new sources. Venture philanthropy, Impact investing, Crowdfunding and Result-based Financing (RBK) are focused on supporting social-based organisations and creating social impact. It is more than the provision of financial resources. Instead, it is a discourse around how to offer finance by introducing new modalities and a new culture around intermediation. In this realm, social impact and its measurement are key issues. This paper aims to describe the available innovation in funding for social economy entities and how the financing needs of social economy entities have become more complex, requiring therefore new mechanisms. Thus, this piece of research applies a qualitative methodology by reviewing the academic and practitioner literature on the topic. The result is an overview of the current and innovative funding initiatives for social organisations. Furthermore, this paper adds in the debate on social economy entities important elements about the demand and the current supply of financial resources.