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April 27, 2010    

Social enterprises struggle to raise capital

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by David Masters
Social enterprises struggle to raise capital

Social enterprises are underfunded because they lack access to capital, according to a new report launched this week in Australia.

The Financing Social Enterprise report, researched by Foresters Community Finance, said social enterprises are often unable to access finance from mainstream lending institutions.

“The greatest challenge for emerging social businesses is their lack of access to capital for growth and development,” said Ingrid Burkett, report author.

Many social enterprises have an aversion to debt, she added, which also makes it difficult for them to raise capital.

To meet this challenge, social enterprises often rely on grants and a volunteer workforce.

However, Burkett believes that as the number of social enterprises grows, this reliance on grant funding can’t continue indefinitely.

“We need really good business models, we need to have our financial systems in place, we need to have good governance structures, almost all the things that are the complete opposite of passion,” she said.

Speaking at the report’s launch, Australian Senator Ursula Stephens welcomed the positive impact of social enterprises within local communities.

“Social enterprises have been recognised around the world as effective models for delivering long-term positive social impact,” she said.

“I am confident that the findings of this report will support that valuable contribution for many years to come.”

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