By Stephen Huddart and Erica Barbosa Vargas
In the coming weeks, the Foundation is rolling out several new resources on Solutions Finance: a series of white papers and related case studies, illustrating some of what we’ve learned over the last decade from our successes—and failures—in deploying capital for systems change. The first white paper is available today. We hope these resources will be useful to a growing community interested in financial innovation for positive social and environmental impact.
Until recently, we did not talk about Solutions Finance. The new term requires a bit of unpacking.
Social Finance refers to financial instruments that generate social and environmental impact alongside financial returns. It is a term widely recognized in the field and the umbrella term we have been using to describe the Foundation’s market-building and impact investing activities. However, as our experience and practice expand, we see that the promise of this work goes beyond investments with blended returns.
Successful systems innovation requires adequate resourcing, and calls for different forms of capital allocation across the multiple stages of design and implementation. To make this happen in the context of our work, we’re advocating for — and adopting as our own practice — an integrated approach to deploying financial capital and adapting financial models to catalyze, sustain and scale systems transformation. In other words, Solutions Finance. This approach includes, but is more than, continuing to grow an investment portfolio with the expectation of a financial return as well as a positive social or environmental impact.