How can a company invest in the social sector?

A rapidly changing market has inspired investors to lean towards impact investments and allocate efforts for the greater good. By placing social enterprises at the forefront, entrepreneurs have expanded investment horizons to include social and environmental issues. As India grapples with the effects of the pandemic, businesses of varying scales have hit a speed bump. Revising your company’s investment portfolio at such a time is not only a necessity but can become a turning point for your organisation. While efficiently putting your capital to work, this can also help you meet global challenges, achieve market-rate returns and stabilize your portfolio. 

Here are 5 ways your company can invest in the social sector:

1. Define your social mission and connect with communities 

Social impact investing is the future of the world, making it important to evaluate and define your company's social responsibility. Cement your social mission by connecting with people and communities, and contribute to goals of a philanthropic, charitable, or activist nature. Look for organisations on the ground (both government and non-government) that you can speak with before deciding to provide financial assistance. Keep in touch with a representative of the organisation, so your queries are addressed to satisfaction. 

2. Bring change with a Collective Investment Fund

When like-minded entrepreneurs come together to bring social change, it does more than just benefit the company's social standing. Pooling money into a Collective Investment Fund/Scheme can help diversify your investments, thus minimising the risk involved. You can choose from socially responsible mutual funds, specifically ESG Funds that support environmental, healthcare, education and employment generation, and many more such issues. Set social and financial goals for the desired future projections that you want these investments to achieve, and re-evaluate them regularly. 

3. Collaborate with the government

If you wish to invest in or work with a cause that is aligned with that of the government, seeking funding possibilities through government bodies can be a good idea. Be it agriculture, education, and technology or large-scale issues like health care and climate change, institutions and even angel investors are allocating funds to companies dedicated to change. A collaborative approach between companies and the government can nudge constructive change in the right direction.

4. Consult an expert 

There has been no better time to revisit and rethink your company's ethos and contour it with a socially inclusive programme. A financial consultant who specialises in social entrepreneurship will have the right information to help you redistribute stagnant investments while providing risk analysis. By leveraging democratised access to change-making start-ups and identifying entrepreneurs tracking towards success, your consultant can help you make more socially responsible investments.

5. Stay updated

Even though social impact investing is far less volatile to market fluctuations than other types of investments, allocating funds to social initiatives is just the beginning. Beyond moral satisfaction, it is equally important to track how your funds are initiating change at the grassroots. Stay informed through investor meetings and public announcements, so you know that sentiments are being turned into action. Educate yourself about the business processes, ethical practices, and strategies of the organisations/causes you support. Only then can your company be truly instrumental in reform.

2021 can prove to be pivotal for companies that aim to contribute to society in meaningful ways. It has become paramount to keep social welfare at the forefront while making decisions about present and future investments. With the focus now shifting on the effect of money in benefitting society as a whole, investing in the social sector is on its way to becoming more profitable. 

So, step up and take your business onto the bandwagon of change. 

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