1. Workshop
Brussels, May 2011 1

2. Internal and External Financing
Financing instrument
Financing source
Financing form
Financing structure
Internal financing
Target group & beneficiaries
Revenues
Public funds
Fixed fees, project financing
External financing
Investors without financial return expectations
Grants
Investors with reduced financial return expectations
Equity, debt, mezzanine capital, hybrid capital
Investors with market-rate financial return expectations
Equity, debt, mezzanine capital

3. Classification of Financing Instruments
Can the social enterprise repay the investment after a few years?
Can the social enterprise pay a certain sum (interest, dividend) in each year? No
Yes
Donations
Equity Capital („Patient Capital“)
Non- repayable Hybrid Capital
Equity Capital
Debt Capital (Interest-free loans)
Repayable Hybrid Capital
Debt Capital
Mezzanine Capital
Financing Structure

4. Social Capital Markets
Institutions in the Traditional Capital Markets
Institutions in the Social Capital Markets
Research & Rating Agencies
Funding Consultancies
Investment Banks
Social Investment Advisors
Commercial Banks
Value Banks
Investment Funds
Social Investment Funds
Venture Capital Funds
Venture Philanthropy Funds
Stock Exchanges
Social Stock Exchanges

5. Financing Conflicts in Case of Simultaneous Financing
Investors with market-rate return expectations
Investors with reduced financial return expectations
Investors without financial return expectations
Public funds
Target group & beneficiaries -
Trade-Off
Interest payment restrictions
(no conflict)
Crowding Out
Tight contractual terms
Trade-off Capital providers pursue different interests (e.g. banks and donors) which can lead to conflicts between social and financial returns
Crowding out Increase of public funding can lead to a lower amount of donations
Tight contractual terms Public funding can prohibit in certain cases the use of additional financing sources
Interest payment restrictions Public funding prohibits in certain cases the use of funds for interest or dividend payments