Stanford Social Innovation Review : Informing and inspiring leaders of social change

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Socially Responsible Business

Creative Financing for Social Enterprise

How can a social-good organization access the capital that it needs to grow? Hybrid legal forms, despite all of the effort and all of the fanfare that they have generated, offer only a limited answer to that question. Far more promising, two legal scholars argue, are hybrid financial instruments that foster trust between social entrepreneurs and impact investors.

 

Social enterprises, like all ventures, leverage ideas through the application of capital. To bring innovative products and services to market—to produce robust and scalable social change—businesses of this kind must have access to reliable funding. Without access to capital, even the most compelling social enterprise idea will go nowhere.

In discussing the challenge of capital access, social enterprise advocates often argue that traditional nonprofit and for-profit legal forms compel...


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