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Book Review: Social Finance

Overall take: An interesting read and comprehensive overview of the social finance landscape, mainly in the UK. Takes considerable steps to bring academia up to speed with practice in this field. In particular, provides some conceptual clarity whilst challenging popular conceptions.

Nicholls, A., Paton, R., & Emerson, J. (2015). Social Finance. Oxford, UK: Oxford University Press. 653 pp. ISBN: 978-0-19-880442-0.


Social finance represents an increasingly popular approach to capital allocation in which capital-owners seek to align social impact with financial return. The field consists of a diverse range of funding mechanisms for non-profits, social enterprises and philanthropic initiatives, including impact investing, microfinance, ethical investing, cooperative and mutual finance, and venture philanthropy. Alongside growing attention from policy-makers, philanthropists, social ventures and investors, the size of the market has also risen, now representing a multi-billion pound marketplace in the UK (Robinson, 2016) and a multi-trillion dollar marketplace in the US (US SIF, 2016). However, despite the growing significance of this field in policy, the economy and society more broadly, academia has remained significantly behind practice (Daggers & Nicholls, 2017). The primary aim of Social Finance is to address this gap. This book represents the first comprehensive effort to map the current landscape of the social finance industry, with critical engagement and insight from an array of expert practitioners and academics. The authors address key topics including the difference between the various forms of social finance, the wide-ranging impacts of social finance initiatives, and the role of policy infrastructure in influencing the field’s development.

Edited by Alex Nicholls, Rob Paton and Jed Emerson, this book features contributions from expert practitioners representing a variety of social organisations, policy institutions and philanthropic networks, and leading academics in social enterprise, impact investing and social investment. Together these contributors provide insights from across multiple perspectives, ranging from economics and finance, to public policy and sociology. Each section is a well-informed stand-alone piece, contributing to a clear, over-arching narrative: social finance has great potential as an alternative funding source for a variety of social ventures, but a careful blend of regulatory and incentive policies in addition to greater awareness of the wide-reaching implications of social finance initiatives are essential to prevent the replacement of social mission with financial objectives. The end result is a critically informed account of contemporary social finance with broad, practical relevance.

The book is organised into 19 chapters and divided into five parts. Part I – ‘Contexts and Debates’ – provides a knowledge foundation for the reader, outlining the main, broad questions in social finance, and the different perspectives seeking to provide answers. These include: Does social investment add value? Who and what should social investors invest in? Is the pursuit of profit compatible with overall societal wellbeing? Part II addresses the landscape of social finance, outlining the main branches of the field, exploring their historical origins and development, and critically evaluating the results of contemporary initiatives. The third section – ‘Models and Metrics’ – examines how social impact and risk are defined and measured in practice. The benefits and limitations of current measurement standards, in addition to social impact measurement more broadly, are identified and evaluated. The contributions within Part IV collectively explore the (mainly policy-related) infrastructure developments that underpin social finance and its progression. The following key questions are addressed: Why do governments intervene in this field? How have they done so? What else can or should they do? What are the practical implications of these interventions? Finally, Part V covers four examples of social finance markets – crowdfunding, foreign direct investment, Islamic finance, and environmental finance – and their implications for the future development of the field. Throughout, each chapter is supported by relevant practical examples and in-depth case studies. The authors primarily focus on the UK context, a justified focus given the UK is often seen as a world-leader in terms of social finance policy and innovation. Considerable attention is also given to the US and European markets, alongside some limited discussion of Asian trends.

The main contribution of this book is the extent to which it fills the research gap that had previously existed within this field. Together the authors address a variety of issues and, in doing so, they challenge several prevailing assumptions about the field. For instance, the contributors go to great lengths to highlight the historical origins and evolution of this field’s key principles and practices, demonstrating that, despite popular conceptions, social finance is not a new trend. This book also challenges the assumption that social impact is always achieved and is always positive. Indeed, the authors frequently highlight the various challenges in aligning social and financial objectives. For instance, to progress the field, investors and intermediaries increasingly demand a standardised measurement system for evaluating social performance, running contrary to the heterogeneous nature of social organisations, their missions and beneficiaries. On this count, Nicholls et al. (chapter 9) offer a valuable insight into the need for social impact in terms of increasing accountability and awareness of ‘what works’, in addition to the limitations of specific measurement approaches, stemming from their underpinning methodological assumptions.

A further contribution of this book is in clarifying different concepts: the authors successfully differentiate key terms such as social finance, social investment, impact investing, microfinance, and microcredit. Such clarity is much needed within this field – from both academic and practitioner perspectives (Daggers & Nicholls, 2017). However, whilst Social Finance takes us considerably closer to a consensus on definitions within the field, it would have further benefited from a definition of philanthropy: despite frequently referring to ‘philanthropy’, ‘philanthropists’, ‘philanthropic capital’, ‘pure philanthropy’, and ‘philanthropic resources’, at no point are any of these terms defined. This is notable given the contributors frequently define and position the various branches of social finance in relation to philanthropy. Consequently, Bishop and Green’s piece on philanthrocapitalism (chapter 4) and John and Emerson’s venture philanthropy piece (chapter 7) remain unclear as to how these trends relate to the broader social finance field.

Overall, Social Finance presents a well-informed and well-balanced critique of contemporary social finance, narrowing the gap between research and practice in this area. Given its focus and quality, this book would be a useful aid for academics interested in social enterprise and social investment, as well as public policy. As it highlights the variety of social finance tools available along with their related moral and practical challenges, this book would also be a useful reference point for practitioners in social organisations. Part IV in particular would also be of use to policy-makers, given it highlights issues in defining social impact, the promises and limitations of social finance, and potential policies (both regulatory and incentives) for encouraging sustainable development of this rapidly-evolving industry.


Daggers, J. & Nicholls, A. (2017). Academic Research into Social Investment and Impact Investing: The Status Quo and Future Research. In: Lehner, O.M., ed., The Routledge Handbook of Social and Sustainable Finance. Oxon, UK: Routledge. pp. 68-82.

Robinson, M. (2016). Social Investment Insights Series: The Size and Composition of Social Investment in the UK. London, UK: Big Society Capital.

US SIF (2016). Report on US Sustainable, Responsible and Impact Investing Trends 2016. Washington, DC: The Forum for Sustainable and Responsible Investment.

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