Transitioning into the world of social impact involves a lot of learning. Sector-specific stakeholders, trends, skills, theories, and frameworks are all areas of knowledge that will help burgeoning changemakers drive effective change. However, one of the biggest learning curves is becoming familiar with the terminology of the industry.
A seasoned social impact professional might sound like they’re speaking another language to those new to the industry. But with the right resources and guidance, it doesn’t have to be overwhelming, and anyone can become fluent in the dialect of social change.
The Good Finance Jargon Buster is a great place to start, especially when moving into social finance and impact investment. It details all the key concepts for navigating this complex and constantly evolving field.
In our Social Impact Glossary, we’ve zoomed out further to explore some additional phrases. Broken down into relevant categories, here is a detailed glossary of terms you might encounter when venturing into social finance, entrepreneurship or the wider social impact ecosystem.
Are there any words, phrases or concepts that you think we should add? Email us at info@careers4change.com
Note: Language holds power—to inform and to shape perceptions. Remaining mindful of the accessibility, nuance and complexity of the terms we use ensures they don’t lose their depth or become oversimplified. While the purpose of this glossary is to clarify key terms, it’s important to acknowledge that jargon has the potential to obscure the issues it aims to address. Language in social impact is political, and the meaning behind these terms can shift depending on context, power dynamics, and lived experience.
Social Innovation and Entrepreneurship
Social Innovation
Developing novel solutions that aim to improve society and make the world more equitable and sustainable. Social innovations better meet social needs than existing solutions through their effectiveness, scalability and efficiency.
Social Entrepreneur
Individuals who establish businesses and pursue new ideas with the goal of solving social problems or effecting social change.
Venture Philanthropy
A type of impact investment that applies concepts and techniques from venture capital finance and business management to achieve philanthropic goals. This model supports and invests in social enterprises.
Benefit Corporation (B-Corp)
For-profit companies that incorporate social and environmental goals into their legal structure. Businesses must undergo a rigorous certification process to be verified by B Lab as a B Corp, meeting high standards of social and environmental performance, transparency, and accountability.
Inclusive Business
Business models that integrate historically excluded and underserved populations into the value chain. Inclusive businesses provide opportunities for people with less access to finance and employment, engaging them in a way that aims to generate net positive social impact and include people with lived experience in creating solutions.
Theory of Change
A comprehensive method of planning that illustrates how and why a desired change is expected to happen in a particular context. A theory of change is used in the design of policy, programmes and programme evaluation to drive outcomes and impacts.
Social Value
The non-financial impact of programmes, organisations, or projects, including the holistic well-being of individuals and communities. This principle emphasises the importance of supporting both people and the planet, rejecting the metric of money as the main indicator of value and asserting that businesses should aim to create measurable net positive impact.
Social Finance and Investment
Impact Investment
Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. This investment strategy can involve different financial instruments, including equity, debt, green bonds, social impact bonds, blended finance, and guarantees, among others.
Social Impact Investment
A subset of impact investing where the focus is specifically on generating a positive social impact, such as improving health, education, or reducing poverty, along with achieving a financial return. Unlike broader impact investing, the primary emphasis in social impact investing is on addressing pressing societal challenges, with financial return secondary to the social mission.
Social Investment
Investments made in projects or organisations with the explicit goal of promoting social good, often without a direct expectation of financial returns. These investments may be focused on charitable or philanthropic goals, emphasising societal benefits over financial performance. The emphasis is on social outcomes, which may not be linked to financial profit.
Impact Firm
A company that manages impact funds or engages in investment activities that aim to achieve positive social and environmental outcomes. An impact firm may manage one or multiple impact funds and is usually responsible for sourcing, evaluating, and managing investments that align with its impact goals.
Impact Fund
A pool of capital that is specifically designated for impact investing. An impact fund is managed by an investment firm or a financial institution and is used to invest in projects, companies, or initiatives that aim to generate measurable social or environmental impact alongside a financial return. These funds are structured similarly to traditional investment funds, but their primary focus is on achieving positive outcomes in addition to financial performance.
Socially Responsible Investing (SRI)
Investment strategies that consider social, ethical, and environmental criteria alongside financial performance.
Mission-Related Investment (MRI)
Investments that align with a foundation’s mission and objectives, balancing impact and financial return.
Social Finance Intermediary
Organisations that connect investors with social enterprises and facilitate impactful investments like providing support and expertise in designing, delivering and managing social investments.
Blended Value
An investment approach that combines financial returns with social and environmental benefits. It is an emerging conceptual framework in which non-profit organisations, businesses, and investments are evaluated based on their ability to generate a blend of financial, social, and environmental value.
Innovative Finance
New financial mechanisms designed to raise funds for social, environmental, and economic development projects. It refers to financing approaches that address social issues by leveraging additional financing (often from the private sector) and/or attempting to provide financing more quickly, efficiently and with greater impact. Innovative financing includes a range of models such as social enterprise, impact investment, transaction taxes and levies on goods and services.
Social Return on Investment (SROI)
A metric that measures the social, environmental, and economic value created by an investment. A key feature of SROI is the application of proxy financial values to non-traded outcomes so that total social, economic, and environmental value is expressed in monetary terms.
Impact Measurement and Management (IMM)
Processes for assessing and managing the social and environmental outcomes of activities. It involves identifying and considering the positive and negative effects that investment approaches have on people and the planet, and then developing ways to mitigate the negative and maximise the positive.
Community Development and Engagement
Community Development
A process where people unite to take action on what’s important to them. It involves making efforts to improve the quality of life in communities, focusing on empowerment and capacity building.
Community Land Trust (CLT)
Democratic, nonprofit organisations that own, develop and steward affordable housing and other community assets for the benefit of the community.
Community Shares
Withdrawable, non-transferable investments in local ventures through share offers that support projects providing social value. They are equity investments into a cooperative or community benefit society.
Community Development Financial Institutions (CDFIs)
Financial institutions that provide affordable lending to underserved communities. They are non-profit lenders that provide debt finance and support to businesses through a relationship-based approach.
Participatory Development
Development approaches involving local communities in project planning, decision-making and implementation to help them shape their own future.
Capacity Building
Activities that enhance an organisation or individual’s ability to achieve its goals. Developing and enhancing the skills, knowledge, and resources needed for effective social investing, allowing them to effectively manage and scale their social impact initiatives.
Advocacy
Actions aimed at influencing public policy, resource allocation, or public opinion on social issues. Facilitating people, especially those who are from minoritised or excluded communities, to have their voices heard, defend their rights, and have their views considered when decisions are made about their lives.
Sustainable and Green Finance
Green Finance
A loan or investment that supports environmentally-friendly activity, such as purchasing environmentally-friendly goods and services or building environmentally-friendly infrastructure.
Green Bonds
A type of fixed-income investment used to fund projects with a positive environmental impact. They offer investors a return on investment in the form of financing or refinancing sustainable projects.
Circular Economy
An economic system aimed at eliminating waste and continual resource use through reuse and regeneration of materials or products.
Triple Bottom Line: An accounting framework that incorporates social, environmental, and financial dimensions of performance to help businesses and organisations move toward a more regenerative and sustainable future.
Corporate Social Responsibility and Governance
Corporate Social Responsibility (CSR)
A self-regulating business model that guides a company’s social and environmental commitments to keep the business accountable to itself, its stakeholders, and the public. CSR integrates social and environmental concerns into business operations and stakeholder interactions.
Environmental, Social, and Governance (ESG)
A framework used for evaluating a company’s ethical impact and sustainability practices. It provides a set of criteria to measure business risks and opportunities in areas of impact. Some investors use ESG criteria to evaluate companies and help determine their investment plans, a practice known as ESG investing.
Social Audit: A process that measures, understands and reports on an organisation’s social, economic, and environmental impact, with the ultimate goal of improving its social and ethical performance.
Systems Change
Holistic and fundamental changes in processes, structures, customs, mindsets, power dynamics and policies to achieve large-scale social impact. Systems change is about confronting the root causes of issues rather than symptoms and involves the active collaboration of diverse people and organisations.
Financial Inclusion and Access
Microfinance
A type of banking that provides financial services to low-income individuals and communities who would otherwise lack access to typical banking services and access to finance.
Microcredit
Small loans extended to low-income borrowers. This form of microfinance, also known as a “microloan”, is usually used to help individuals become self-employed or grow a small business.
Financial Inclusion
The idea that individuals and businesses should have access to useful and affordable financial products and services that meet their needs, delivered in a responsible and sustainable way.
Global Frameworks and Goals
UN Sustainable Development Goals (SDGs)
17 global goals set by the United Nations to end poverty, protect the planet, and ensure prosperity for all by 2030. Explore all 17 SDGs here.
Social Bond
Debt instruments used to finance or refinance social projects whose purpose is to address a social issue and support communities and members of society in most need. To achieve results, social bonds must have measurable goals.
Hopefully, this guide is a helpful resource and something to refer back to. It’s worth noting that given the continual evolution of language, many more terms and phrases will emerge, and as it stands, this glossary is non-exhaustive. As we mentioned above, language is a powerful tool for change—and as new concepts take shape, our understanding of inclusive and effective communication should grow alongside them.
