When it comes to funding a social enterprise or CIC, two key sources often come into focus: grants and impact investment. While both aim to support mission-driven work, they operate quite differently – and choosing the right route depends on your goals, stage of growth, and risk appetite.
Grants are typically non-repayable funds provided by charitable trusts, foundations, or public bodies. They’re ideal for early-stage ventures or pilot projects that may not yet be revenue-generating. Grants give you breathing space to test ideas, build capacity, or deliver vital community services without the pressure of financial return.
However, they often come with specific requirements and monitoring frameworks. Reporting can be time-consuming, and securing multiple grants can lead to short-term thinking if not managed strategically.
Impact investment, on the other hand, involves funding from individuals or organisations seeking both a financial return and a measurable social impact. It could be structured as a loan, equity, or other financial instruments — and is best suited to ventures with a clear revenue model and growth potential.
This type of funding is more sustainable long-term if your business can generate income. It also comes with greater scrutiny: investors expect robust governance, clear KPIs, and a plan for return on investment.
Ask yourself:
Is your venture revenue-generating or on its way to becoming so?
Do you need one-off project funding, or are you scaling for growth?
Are you comfortable with financial accountability and repayment terms?
For many social ventures, a blended approach works best, using grants to establish proof of concept and attract impact investors later down the line. Whichever route you take, clarity in your business model, impact goals, and financial planning will strengthen your case.
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References
Social Enterprise UK (2023) The Future of Funding: Blending Grants and Investment. Available at: https://www.socialenterprise.org.uk
Big Society Capital (2024) What is Social Impact Investment? Available at: https://bigsocietycapital.com
NCVO (2023) Grants and Contracts: A Guide for Charities. Available at: https://www.ncvo.org.uk
Nesta (2022) Funding Innovation: How Social Ventures Finance Their Growth. Available at: https://www.nesta.org.uk