Jane Bruce is confused about all the lingo and the merits of the latest funding fads

Since starting the Clore Social Leadership programme, my brain has been bamboozled by buzzwords relating to emerging forms of finance such as crowdfunding and social impact bonds.

Having spent my career to date at two charities that raise donated income primarily from traditional sources (individuals, trusts and companies) it’s an adjustment to start considering different options for financing social sector work.

But in a quest for the Holy Grail that is sustainability, I’m keen to get my head around it all. I recently got the lowdown on crowdfunding at a fab (and free) event run by Nesta, the innovation charity.

Ultimately, does it matter if someone profits from the work you do to improve the lives of vulnerable people

Crowdfunding involves businesses using internet platforms to raise finance from a large number of generally small investors. Translated to the social sector, one variant involves individual donors coming together to fund distinct projects using portals such as Believe.in or bespoke sites such as Cancer Research UK’s myprojects.

More recently north of the border, Community Shares Scotland was launched to encourage community enterprises to take share offerings to market using the Microgenius platform.

I have since attended the first in a series of business capability workshops run by Clore Social, which again touched on the theme of social investment. In times when traditional grants, donations and contracts are all being squeezed, social investment is seen by many as a means of the sector expanding its reach in the face of austerity. Social impact bonds in particular provide a potentially interesting mechanism for tackling intractable social problems such as reoffending and vulnerable children entering care.

So I’ve kind of got my head round it (and I’ve four more workshops to go which should help) but I am left at this stage with a lot of questions – does it matter where you get your money from to do your social good? Does it matter if you have investors not donors? What difference does it make if you have lots of small investors versus a few high-profile large ones? How might close involvement of private investors influence your social impact both positively and negatively?

Focus on impact is a good but do we risk dehumanising the people we work with by using payment by results? Does an investment approach encourage organisations to focus on “low hanging fruit” and avoid the most in need? And ultimately, does it matter if someone profits from the work you do to improve the lives of vulnerable people?

Yikes! As you can see I haven’t quite worked it out yet. Answers on a postcard please.

Jane Bruce has left Venture Scotland to become a Clore Social Leadership fellow. This article is part of a TFN series exploring her experience.