Alternative funding sources
Traditional funding methods may not always be sufficient or available to support sustainable initiatives.
Fortunately, alternative funding methods are emerging as powerful tools for businesses and organisations striving to achieve sustainable financing.
These methods offer innovative approaches that blend financial returns with social and environmental impact. Let’s explore some of these alternative funding methods:
Social impact bonds (SIBs)
Social impact bonds are performance-based loan initiatives designed to address social issues.
With a SIB, private investors provide upfront capital to fund social programs. If the program achieves predetermined social outcomes, such as reducing local waste or pollution in a city, the government repays the investors with financial returns.
SIBs incentivise collaboration and efficiency by shifting the risk of program implementation from the public sector to private investors.
There is a full list of current SIB initiatives you can get involved with on the government website, or you can rally your team together to pitch one of your own.
Development impact bonds (DIBs)
Development impact bonds operate similarly to SIBs but focus on international development projects. DIBs involve partnerships between donors, development organisations, and investors.
This will work well if you have international offices, and want to contribute to projects outside of the UK, such as reforestation. This initiative will see your business plant more trees, preserve forests, or protect certain pieces of land, for instance.
Blended finance models
Blended finance models combine public and private funding sources, philanthropists, nonprofits, and social enterprises to finance sustainable initiatives.
This approach leverages the strengths and resources of various stakeholders to tackle social and environmental challenges.
Blended finance structures can take different forms, such as public-private partnerships or a collection of impact investment funds. By combining resources and expertise, blended finance models enable investments that may not be feasible through traditional financing alone.
Philanthropic grants and funding
Philanthropic grants and funding from foundations, nonprofits, and philanthropists can be instrumental in supporting sustainable initiatives.
These sources often prioritise social and environmental impact over financial returns. They offer grants or other forms of funding to businesses and organisations that align with their mission and have the potential to drive positive change.
Philanthropic funding can provide crucial early-stage capital for innovative projects with high social or environmental value.
Crowdfunding and community finance
Crowdfunding and community finance platforms empower individuals and communities to directly contribute to sustainable initiatives.
These platforms enable businesses and organisations to raise capital by presenting their projects to a broader audience.
Crowdfunding campaigns can mobilise support from environmentally-conscious individuals who are eager to invest in causes they believe in.
Challenger banks
Challenger banks are stepping up their efforts to promote environmental sustainability, making them a great choice for increasing your sustainability efforts.
Where big banks have been falling short for small businesses as of late, challenger banks have stepped up as the innovative sibling that loves to keep things modern and relevant.
This year, Monzo took a significant step by purchasing carbon removals to offset the emissions produced by their debit cards and spending throughout 2021. This action alone removed a staggering 1,265 metric tons of CO2e from the atmosphere, according to its website.
Monzo has chosen to support reforestation efforts in Kenya through The International Small Group and Tree Planting Programme (TIST). This specific project was assessed by a regulator to assure the bank’s customers, and to ensure its quality and impact potential.
As another example, here’s what Revolut had to say about sustainability:
“At Revolut, we’re changing the way people use and interact with technology, and shaping the future of financial and lifestyle experiences.
“But a company for the future needs to holistically align with the needs of the future – not just the economic needs, but also the environmental and societal needs of the world around us. We’re on a mission to put global sustainability at the heart of all we do at Revolut.”
Simply aligning with a challenger bank can help you become part of its commitment to environmental responsibility.
Your banking choices can contribute to the restoration of ecosystems and the reduction of carbon emissions, fostering a greener and healthier planet for all.
Let’s not forget the added perk of cashback rewards, making your banking experience even more rewarding in multiple ways.
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