Capital Cohabitation
FAQs
What is social capital and what are the social capital markets?
Please refer to general lingo page.
In what ways have capital markets failed to support investing in social value?
In general, capital markets can support any variety of for-profit enterprises, but when it comes to investing in social value, there have traditionally been only grants or loans, with few options for creating real capital investment to expand ventures that aren’t clearly creating either social or economic value. This lack of instruments inhibits managers pursuing blended value, whether in mainstream corporations, emerging for-profit social ventures, or social purpose enterprises attempting to scale their ventures.
What are some of the investment vehicles in social capital markets?
These cover the spectrum of market rate capital (socially-screened funds like Calvert and Domini), near market rate capital (social and community development venture capital) to capital that does not yield a return (strategic philanthropy and traditional grantmaking).
INSTRUMENTS OF THE SOCIAL CAPITAL MARKET
Type of Instrument*
|
PRIs
|
Grants
|
Debt
|
Equity
|
Cost of capital
|
3-5%
|
0%
|
8-10%
|
ROI – variable rates
|
Board/Investor role
|
No
|
No
|
Maybe
|
Yes
|
Available for housing
|
Yes
|
Yes
|
Yes
|
Yes
|
Available for nonprofit business
|
Very limited
|
Yes
|
Very limited
|
No
|
Appropriate mix
|
15%
|
15%
|
20%
|
50%
|
Present mix
|
0%
|
90%
|
10%
|
0%
|
Please refer to Key Terms and Definitions page for explanations of type of instrument.
What are the market inefficiencies of the growing social capital market?
Like other markets, the social capital market requires efficiency, transparency, and measurable outcomes for sustained growth. There are primary inefficiencies within the social capital market:
- High transaction costs
- Lack of adequate information flow
- Lack of market responsiveness
- Lack of connection between organizational performance and capital allocation
- Lack of common standards and definitions
- Lack of intermediation
- Lack of common understanding of relation between risk and various returns
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