Mobilizing Commercial Investment for Social Good: The Social Success Note

Abstract

In this chapter, we present a new pay-for-success investment model, which we call the “Social Success Note”. This approach may offer an innovative solution to crowd-in commercial investment at scale to organizations that seek to achieve both financial sustainability and measurable positive social and environmental outcomes. While initially designed for investment into social enterprises, this pay-for-success financing solution has application wherever there is the potential to incentivize greater positive social and environmental impact through an outcome payment linked to investment.

In the Social Success Note model, a private investor agrees to make capital available to a social enterprise at a below-market rate. The investee has to repay the investment or loan, but if it achieves a predetermined social outcome, a philanthropic outcome payer provides the investor an additional “impact payment” corresponding to a market-rate return.

The Social Success Note is being developed and piloted by Yunus Social Business, a global incubator of social businesses, and The Rockefeller Foundation as part of its Zero Gap portfolio, focused on developing innovative financing solutions to address the world’s most critical challenges.