Why and how are donors supporting social enterprises?

This report unpacks old and new motives to deploy taxpayer resources in support of business models intended for social impact, and looks in detail at some 30 programmes funded by five major development agencies, including USAID and DFID.

The report finds that, despite widespread adoption of the term ‘social enterprise’ (SE)  in the impact investment industry centred around private foundations,  public donor agencies still seldom use this term. As a result this work should be seen as a partial stock-take of a rapidly evolving arena, in which public donor agencies are supporting a variety of business models intended for social impact, not just SEs as such.

The main stated rationales for the programmes we reviewed focus on greater inclusion-of the poor, of women and other vulnerable groups-in the growth process. This suggests clarity on impact goals: and yet a third of the programmes reviewed had no assessment framework and over half had no impact metrics in place. 

We believe that greater specificity about impact, and more clarity about how to balance social and environmental with purely commercial/financial outcomes, is the way forward.

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