Enriching the social finance ecosystem: The design of a social mutual fund

Seminal theoretical work has been conducted, during the last 5 years, in the field of social finance as a mean of funding social business, social entrepreneurship and thethird sector in general. Along with the theory, national (UK, Canada, Australia etc)and supranational policies (ie the EU) have been implemented and through anongoing process the social finance tools proving their utility and scope (i.e socialbonds, social funds etc) in the short run and anticipated to the long one.In this paper we will present the theory behind the design and the model of a socialmutual fund (SMF) as a complementary tool to the already functioning socialfinancial tools.

The target groups for this new social finance tool are companies and smallinvestors that want to diversify their investment options. Mutual fund managerswho want to diversify their investment portfolios. The primary focus would be set in Greece due to a less developed social economy and social entrepreneurship in so far.

Designing and implementing a social mutual fund as an additional function for social innovation and social finance along with social bonds, venture funds, microfinance etc. Ideally in a Social Stock Exchange, stocks of social enterprises would be traded providing funds to these companies.The target groups of this SMF are a) members of social enterprises b) potential investors.

Pilot SMFs’ would be established either in Euro or/and incomplementary currencies. Furthermore, if national SMF pilots are successful, a next stage would be thedesign and formation of a European Social Mutual Fund that would include“baskets” of social enterprises of different legal frameworks and activities from allover European Union.By giving alternatives to social enterprises, social responsible companies for strengthening their funding pools and investors who want to participate in the evolution of the social capital market and social finance in general in Europe, the essence of the European ideal would be more tangible to its citizens.

Additionally, in that way, investors as well as members of social enterprises and social cooperatives can purchase shares and participate actively to the formation of a new type of social capital as Robert Putnam defines it.In that way, by providing this solution of social investment, society would benefit,due to a larger pool of capitals for social enterprises in order they would fulfil their scopes and targets. A long-term-developed economy would emerge apart from the mainstream financial sector that gives emphasis on profits and non-viable-short-term investments.

What are you interested in?