Delineating social finance

This paper reviews social finance. Venture philanthropy, microfinance, crowdfunding and social impact bonds are financial and social innovations that reshape capital markets, the production of public goods, en- trepreneurship and the fundamental principles of financial analysis. In this context, the pursuit of social and environmental impact is assessed alongside the tradeoff between risk and expected return. The market for impact investments consists of suppliers of capital, recipients of capital, the institutional framework and financing flows. This paper describes the financial market for the pursuit of impact and highlights principal challenges, such as the small scale and long horizon of social ventures, the lack of standardized reporting and financial measures for social outcomes, as well as the elusive causality between impact investments and social change.