Here at Good Finance, we’re lucky enough to engage with social entrepreneurs, community business and charity leaders from across the UK on their experience with social investment – the ‘warts n all’ journey, if you will.
Given our unique role within the sector, we felt it was only right to be more intentional in collecting these insights (we have done this before but wanted to make sure we are in touch with current perspectives), with a view to share them back with social investors (see more context on this via our recent blog). Highlighting both positives and areas for development, we hope this blog promotes transparency around some of what is and isn’t working in the social investment sector in 2025.
We’re extremely grateful to the 15+ leaders that shared their opinions and experiences with us for the purpose of creating better social investment processes and more openness, we’ve condensed these insights into an exclusive 5 lessons learned: social investor edition...
Due Diligence will never be fun, but it could be better
Many investees found the initial process overwhelming due to the extensive list of required information and documentation; particularly when it wasn’t communicated ahead of time why certain elements were necessary.
Simplifying these requirements where possible or providing clear guidance from the word go on what is required and why could make the process more manageable, especially for smaller charities with limited resources. Think about what you could provide to make life easier – previous examples? Signposting to pre-investment support? Financial frameworks? One initiative that has tried to tackle this challenge is the Financial Passport and starts by collecting the key pieces of information every investor needs.
The suppliers you work with are part of the overall process, and some flagged frustration on trying to work with solicitors, accountants etc. who didn’t seem to fully grasp the social enterprise model / not-for-profit ethos – which is integral to most.
Lots of investees highlighted that they could see the importance of due diligence and could reflect in hindsight that it did make their business better – so ensuring you take some time at the start of the process to map out what you’ll ask and why may save further frustration later down the line.
TOP TIP: Signpost your applicants to the Good Finance Learning Hub at the start of the process, which includes a deep dive module on what to expect from Due Diligence.
It’s always about more than just the money
One commonality we had across the board from this project was the incredible and unfaltering wrap-around support provided by many investors, which goes far beyond the capital provided.
Many highlighted contexts where investors went above and beyond their expectations, with examples including connecting them with other potential sources of capital, providing business support, suggesting other programmes / accelerators and putting them forward for networking and profile-raising opportunities.
Perhaps unsurprisingly, a social investors ability to be flexible on repayments and a more human approach for when things don’t go to plan was hailed as a real game changer for many, and actually a big motivator for exploring social finance in the first place.
Ultimately, this is one of the key aspects that make a social investor ‘social’. Harness the power of your networks and abilities to apply patience to the loan to ensure you have fully exhausted every non-financial avenue of support and maintain that throughout the duration of the partnership– it really will make a difference.
TOP TIP: Make the most of the free resources on our website, including Pre-Investment Support Hub and the Advisor Directory, both of which are designed to signpost to other individuals, organisatons and resources that can help with next steps.
Impact REALLY matters..
Having an investor that understands social impact, saving the investee from repeating themselves time and time again proved to be invaluable for investees. You live and breathe social impact and its importance everyday through your work and are united in your passion for making a real difference.
Put quite simply, you get ‘it’ – and this could prove invaluable to an investee who’s exhausted in trying to explain the ins and outs of social impact and why it matters to them.
Given that many social investors are in fact charities or social enterprises themselves, this can highlight your shared values and support the ways in which you capture and communicate social impact to provide real-life examples.
Ensure you’re upfront about your expectations around the on-going monitoring and measuring of social impact and why it’s important to your organisation to avoid what some investees dubbed feeling a bit like a box ticking exercise. Tell them what you actually DO with the information they provide.
TOP TIP: check out our free online Outcomes Matrix and encourage organisations to use that as a starting point for planning, measuring and communicating social impact in terms of outcomes.
Transparency is key and timing is everything
One of the more frequent gripes from social investees was around the length of time it can take from expression of interest all the way through to drawdown of capital. In many cases, it seems the duration wasn’t necessarily the issue, but false hope around unrealistic timeframes sometimes made life difficult for an investee, in particular one is juggling multiple sources of finance.
It might be an idea to work out average draw down periods for a fund or your organisation and ensure you’re communicating the factors that are outside of your control e.g. timelines from external investors or the ability of the investee to get back to you with timely information.
Being open about the priorities for your capital and what you will or won’t invest in can lead to a much quicker ‘no’ from the get go, which actually empowers the organisation to continue their search with other investors – and even better if you can connect them directly with a potential match!
Unexpected costs are one of the biggest drivers of stress for investees at what is already a tense time. Keep them in the loop at every stage of the process with likely costs and what they will be expected to cover – both during and after the investment has been deployed.
TOP TIP: If an organisation is not a good fit for your capital, include signposting to the Good Finance Fund Mapper that might be able to support them with next steps. Reach out to Good Finance for some text around our tools / resources that could be added to the end of your email.
It’s (not) personal, but maybe it should be?
One founder highlighted that they were particularly touched when a social investor had kept in the loop with some of their key organisational news and updates. Perhaps a relatively modest action in the grand scheme of things but it really made them feel valued and understood during quite a tricky point of the process.
Another investee reminded us of how difficult it was to have somebody else question the one thing they had been living and breathing for the last 10 years during the stress-testing parts of due diligence. Really try and put yourself in their shoes, work on an empathetic approach and make sure you provide context for each question to make this process more collaborative.
From site visits to regular coffees / catch-ups – what else could you be doing to improve and maintain the personal relationship you hold with your investees?
TOP TIP: Take some time before each catch-up to understand current challenges and opportunities of the organisation from their social media posts or newsletter. Failing that (or preferably in addition) build in at least 5-10 minutes of your meeting for a general check-in to better understand what’s going on in their world.
Consideration of some of the points mentioned above might help it to be slightly less painful for all parties. To hear these insights in full, check-out our full YouTube video where we’ve used voice overs to deliver some of this key feedback.
As ever, we’re eternally grateful to all social investors that take the time to listen to feedback and are open and enthusiastic about making changes to help establish more a more effective process.
If you’re a social investor and you’d like to chat through some of this feedback in more detail, don’t hesitate to contact info@goodfinance.org.uk.