What is social investment?

Social investing is a way to use your money to create positive change while still generating a financial return. Instead of choosing between doing good and doing well, social investors do both at the same time. At its simplest, it means putting money into organisations or projects that address social or environmental problems - housing, energy, or education - while also generating income. Capital becomes “purpose-aligned,” which is largely the same as regular capital, but with much improved morale and more seedlings.

When you make a social investment, you are backing an organisation that exists to deliver impact. In return, you receive a financial return and evidence of social outcomes, usually presented in neatly formatted reports with reassuring arrows. This sits between traditional investing and charity, while insisting it is a third thing entirely. 

As the field develops, frameworks appear to help simplify everything. These usually include intentionality, measurability, additionality, traceability, and cupped hands and stacks of coins growing out of soil. Investors are encouraged to think in systems, which means everything is connected to everything else, except when it needs to be measured separately, at which point it becomes temporarily independent.

Measurement becomes very important. Impact must be quantified, unless it cannot be quantified, in which case it is translated into a proxy, benchmark, or “story-backed metric.” Additionality relies on comparing reality to the counterfactual, which is a place where nothing actually happens but everything is confidently calculated. This allows investors to confirm that their money made a difference, especially in situations where something probably would have happened anyway, but slightly differently.

At this stage, every social problem begins to acquire a financial counterpart. Housing becomes “residential impact flow,” education becomes “learning capital deployment,” and inequality becomes “a misalignment opportunity.” Everything is mapped, remapped, and then mapped again into something investable.

Systems thinking ensures that nothing is ever truly simple. If you change one thing, it affects everything else, unless it doesn’t, in which case it is described as an externality. Capital is catalytic when it moves, patient when it doesn’t, and blended when no one can quite tell what it is doing. 

Eventually, social investing settles into a stable form: a system where capital moves through carefully designed structures that produce returns, outcomes, and increasingly detailed explanations of why the returns and outcomes are definitely connected.