American Social Enterprise May Get Boost From Government

Social Enterprise is alive and well across the pond, but the U.S. government has been slow to acknowledge it…until now. The Obama administration is finally putting faith in a proven avenue for social responsibility.

The Impact Investment Fund would provide $1 billion for organizations that fund businesses in areas of economic distress or who provide social responsibility through projects such as clean energy. The fund would work by providing a 2 to 1 match for funding.

The exact details on the fund's inner workings have not been announced, but it may be based on a Enterprise Innovation Fund proposal that has been floating about since 2009. The Obama administration has placed an emphasis on living greener and providing cleaner energy, but the fund will likely go far beyond those areas.

Social enterprise activists hope the government will also take underwriting responsibility as well in case some investments fall through. This will go a long way towards banks providing funds for more risky social enterprises and venture philanthropy.

Banks have been more forthcoming with funds for social enterprise since the Community Reinvestment Act, but this fund could spur them further and open up even more loans and lines of credit. These are vital to social enterprise startups who don't have the backing of significant venture philanthropists.

Many venture philanthropist groups want to see results from a social enterprise before putting money in for investment. The Impact Investment Fund could provide the much needed building blocks.

The United States would not be the first country to create a fund such as this. Canada already has a Impact Investment Fund and many companies and municipalities have similar funds on a much smaller scale.

Only time will tell if the fund sees the light of day in these times of economic strife, but it may be an uphill battle. Impact investment has had a difficult time taking hold in the U.S. as businesses and organization struggle to create higher returns and to attract investors.

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