Social Finance

Glossary


 

  • Angel investor: An affluent individual who provides capital for a start-up enterprise, usually in exchange for some stake in ownership equity.
  • BoP: The “Base of the pyramid” describes groups of people in emerging markets who earn less than $3,000 a year (2002 PPP) (World Resource institute.).
  • BoP+: Population with incomes exceeding BoP definition, but who can still benefit from impact investments that expand their access to services and opportunities.
  • BoP penalty: The BoP often pay higher prices for basic goods and services than do wealthier consumers, either in financial or transaction cost, and often receive lower quality (World Resource Institute.).
  • Development finance institution (“DFI”): DFIs are government-controlled institutions that invest in private sector projects with a double bottom line objective of spurring development in emerging countries while remaining financially viable institutions.
  • Community development finance institution (“CDFI”): CDFIs are financial institutions created to reduce poverty in economically depressed areas, typically through providing credit, financial and other services to underserved markets or populations, mainly in the U.S. and U.K.
  • Double (or triple) bottom line: The simultaneous pursuit of a social enterprise or business to achieve financial, social and/or environmental returns on investment.
  • Invested capital: For non financial companies the sum of total shareholders equity and net debt. For microfinance total assets minus total deposits.
  • Mission-related investment (“MRI”): An investment capitalized with assets from the endowment of a foundation that seeks to create social impact as well as typically market-rate, risk-adjusted financial returns.
  • Plus population: The population of people that are included in the BoP+ classification but not in the BoP.
  • Program-related investment (“PRI”): An investment made by a US-based foundation that furthers charitable purposes and is not made with the significant purpose of generating a profit. A foundation is permitted to count the investment toward its annual "5% of assets" philanthropic payout.
  • Small and medium enterprises (“SME”): Many institutions and countries define SME differently, but often the size of an enterprise is determined by the number of employees or the annual sales generated by the business. The World Bank defines enterprises meeting two out of the following three criteria -: minimum 50 employees, under $3m in each assets and sales – as SMEs.
  • Social entrepreneur/enterprise: An entrepreneur or organization that pursues a double or triple bottom line business model, either alone (as a social sector business) or as part of a mixed revenue stream that includes charitable contributions and public sector subsidies.