The Quest for Blended Value Returns: Investor Perspectives On Social Finance in Canada

Jed Emerson has stated that “that all organizations, whether for‐profit or not, create value that consists of economic, social and environmental value components—and that investors (whether market‐rate, charitable or some mix of the two) simultaneously generate all three forms of value through providing capital to organizations (Emerson 2003).” Jed Emerson calls this phenomenon the Blended Value Proposition. We argue that when investors seek intentional blended value returns they engage in social finance.

We define social finance as the application of tools, instruments and strategies where capital deliberately and intentionally seeks a blended value (economic, social and/or environmental) return. Organizations that receive such investment can be found in the non‐profit and for‐profit sectors or in the hybrid space between them, are mission‐driven and seek to maximize blended value. Increasingly mainstream investors are seeking opportunities to invest in these organizations. To be successful such investments require a suite of financial tools, a cadre of new financial intermediaries, and a set of measurement metrics that capture the impact of the blended value return.

Social finance requires a deeper theorization in academic literature. The few published works on this theme approach social finance through differing frameworks (Emerson and Bonini 2006, Mendell and Nogales 2008, Nicholls and Pharoah 2007). Gaining a deeper understanding of social finance has not been helped by the myriad of terms applied to the concept of intentional investing for positive social impact. These terms include socially responsible investing, social investing , responsible investing, ethical investing, double and even triple bottom line investing, impact investing, and targeted investing to name a few1. Each of these terms has differing origins and approaches in their investment beliefs.

Social finance in Canada is a nascent stage of development, and can be characterized as “uncoordinated innovation” where disparate entrepreneurial activities and business model innovations occur in response to market needs or policy incentives (Monitor Institute 2008). For many, social finance is defined as the provision of capital for social enterprises. 2 For others, social finance describes an intent on the part of the investor to actively seek both financial returns, whether at market‐rates or below‐market rates, together with social and/or environmental impacts that are the direct result of their investment (Monitor Institute 2008). In essence the first definition sees social finance as primarily demand driven, growing out of the capital needs of social enterprises. While the latter sees social finance as supply driven, with a focus on the investor as the primary actor. We argue in favour of the latter definition. However, the differences and similarities between each of these approaches need to be more clearly understood.





Carleton Centre for Community Innovation


Karim Harji, Tessa Hebb


November 1, 2009

Media Type:



Impact Investing