COMMITMENT TO ACTION
Social Success Note to Leverage Social Good Financing
Commitment by Yunus Social Business - Global Initiatives
IN 2015, YUNUS SOCIAL BUSINESS COMMITTED TO PILOT THE SOCIAL SUCCESS NOTE (SSN). DEVELOPED IN PARTNERSHIP WITH THE ROCKEFELLER FOUNDATION, THE SSN IS AN INNOVATIVE, RESULTS-BASED FINANCING INSTRUMENT THAT ADDRESSES THE INVESTMENT GAP FOR IMPACT-ORIENTED SMES AND SOCIAL BUSINESSES. THE NOTE WILL ACHIEVE THIS BY PRICING SOCIAL OUTCOMES AND TRANSFERRING THE VALUE OF THESE SOCIAL OUTCOMES IN THE FORM OF AN ADDITIONAL RETURN FROM AN OUTCOME PAYER (PHILANTHROPIC ENTITY) TO A MAINSTREAM INVESTOR, IF AND ONLY IF THE SOCIAL BUSINESS INVESTMENT DELIVERS THOSE SOCIAL OUTCOMES. LEARNINGS FROM THE PILOT WILL BE SHARED WITH THE BROADER IMPACT COMMUNITY IN THE HOPES OF CATALYZING A SSN ECOSYSTEM THAT WOULD ALLOW MAINSTREAM CAPITAL TO ADEQUATELY FUND SOCIAL BUSINESSES RELATIVE TO WHAT TRADITIONAL INTERNAL RATE OF RETURN (IRR) INVESTMENT HURDLE RATES WOULD ALLOW.
Yunus Social Business and The Rockefeller Foundation commit to create the first demonstrable pilot of the SSN, with the aim of ultimately catalyzing the creation of a SSN ecosystem.
Yunus Social Business accelerates and finances social businesses across seven countries, enabling entrepreneurs to solve social problems in a financially self-sustainable way. Over the period of the commitment, it will leverage its network to identify the most appropriate partners (social business, outcome payer, and investor) for the pilot. Yunus Social Business will also structure and implement the transaction. Learnings from the pilot will be shared with the broader impact community to catalyze a SSN ecosystem that would allow mainstream capital to adequately fund social businesses in comparison to what traditional internal rate of return (IRR) investment hurdle rates would allow.
Apart from funding this effort, The Rockefeller Foundation will leverage its expertise (both technical and legal) and influence to help realize the proof-of-concept and scaling of this innovative financing solution. The Rockefeller Foundation will also actively explore the possibility of being an outcome payer in the first pilot, as well as pathways for scaling the SSN more broadly through institutional structures.
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