Equity finance for social enterprises

Abstract

Purpose

To study a range of options for providing equity finance (equity capital) in social enterprises.

Design/methodology/approach

The UK government’s keenness for social enterprises to overcome the sector’s cultural aversion to borrowing and seek finance for their activities and end grant dependency within the sector is discussed. Considers the different motives of ethical investors and the potentially blurred boundary between what constitutes a social enterprise and what constitutes a private enterprise. Reports on how the Community Interest Companies (CICs), which provides the legal format for social enterprises, has adapted its regulations to pave the way for new forms of equity finance for social enterprises.

Findings

It is possible to adapt the rights of ownership identified by Jeff Gates (1998) to provide the basis for equity finance for social enterprises through its attention to liquidation rights, income rights, appreciation rights, voting rights, and transfer rights.

Originality/value

Clarifies some of the aspects involved in equity finance to reveal the potential of this type of finance for social enterprises.

Citation

Brown, J. (2006), "Equity finance for social enterprises", Social Enterprise Journal, Vol. 2 No. 1, pp. 73-81. https://doi.org/10.1108/17508610680000714