Funding Social Change: Get the gist on the future of Social Financing

The Future

The drivers outlined in the previous section largely influence the future of Social Financing. If these forces unfold in the most probable way, the baseline or expected future will emerge. However, there are a number of variables that could guide the development of Social Financing in different directions. This section will describe the baseline scenario and outline some of the variables that could potentially lead to alternate scenarios.

The Baseline Scenario

Over the next few decades, dealing with social challenges will continue to be a major concern for countries and regions of all shapes and sizes. As the world continues to recover from the global recession, the new normal for government institutions will be doing more with less. In the industrialized world, increasing inequality and aging populations will put a major strain on the social sector for both the young and old. People in emerging economies will demand access to social services once thought to be out of reach. In underdeveloped regions, epidemics, political instability, and harsh living conditions will create major humanitarian issues that the rest of the world will not be able to ignore.

Made constantly aware of the world’s pressing social problems by an unrelenting steam of real time media, it will become readily apparent to people from all walks of life, especially the young, that the current system for solving social problems is not sufficient. This will help to create a new breed of philanthropically minded individuals, the pioneers of Social Financing, who will look for new ways to solve social challenges using tools from the business world.

Initially, only a small number of investors, entrepreneurs, and government institutions will actively engage in Social Financing ventures. There will be many examples of governments experimenting with Social Impact Bonds without success and Social Purpose Businesses that fail. However, by applying proven business techniques and using the most current data collection technologies and practices, Social Financing ventures will become less and less risky over the next few decades. Once the possibility to reliably create entities and make investments that focus on both creating positive social change and making a profit is demonstrated, Social Financing will become mainstream.

By 2040, traditional social service organizations will share a significant amount of their burden with stakeholders from the Social Financing arena. Individuals who are looking to invest their savings will consider options like Social Investment Funds alongside the more traditional options available today. The Millennial generation will hold great power in the business world and their preference for working for companies that do good will have reshaped many business practices. Although there will always be humanitarian disasters and social challenges, the once emerging field of Social Financing will make these issues more manageable and overall, create a better world.

Potential Variables

The following indicators illustrate concerns or variables that could lead to alternative futures. Organizations interested in the future of Social Financing should monitor changes related to these areas.