What We Do

Key Area: Social Finance

 

Our Goal

To promote the practice of Social Finance amongst foundations and other social impact-oriented investors around the world and, in so doing, strengthen support for the social sector.

Challenge

Definition

Social finance is an approach to investing and managing money which yields both financial and social returns. It is often about financing social enterprises and nonprofit organizations. 

Society’s challenges have become increasingly complex and so the ways in which we try to address these challenges have to keep pace. Front-line social organisations are called upon to play a larger role in society today and the funding needs of these organizations has grown, but also changed in that many need access to types of funding that has not traditionally been available to their sector, like loans, equity and mezzanine capital. These forms of capital are typically not available to social organizations from traditional financial players.

Opportunities

While there will always be a place for traditional, donation-driven philanthropy, it increasingly makes sense to adopt tools, products and practices from other fields to solve societal problems. Venture philanthropy introduces an approach to the sector which opens up a variety of non-financial resources, like strategy consulting, organizational capacity building, involvement of networks, alongside new types of funding, including debt instruments and equity funding. The approach looks to the financial practices venture capital and private equity, while recognising the unique challenges, opportunities and responsibilities of the social sector.

Our Approaches and Instruments

The BMW Foundation’s work in this area takes two forms:

  • Promotion of the topic through convenings, knowledge building, building of bridges between actors, and support of intermediaries; and
  • Direct investment in select funds and direct investments through an impact investment program

In August, 2014, for example, we brought together leaders form the nascent Social Impact Bond (SIB) market for the first global, peer-to-peer workshop ever for this field in order to discuss how to build the market worldwide and work together to make this important financial tool available to organisations around the world. We have also been involved as pioneers in Germany in investing in the first SIB, making some of the earliest impact investments, and in showcasing international best practices in venture philanthropy in Germany in order to build the market.