Idea in Brief
The economic crisis of 2008 deeply damaged the credibility of financial innovation in the general public’s mind.
But financial engineering can bring important resources to social enterprises—organizations that deliver both social and financial returns. Tools that unbundle the two kinds of returns can help these organizations access the financial markets to the fullest.
Forward-thinking social investors like the Bill & Melinda Gates Foundation, Bridges Ventures, and BlueOrchard are already finding new ways to leverage their funding for maximum social benefit.
Stakeholders in the social sector must build the market infrastructure and legal frameworks needed to harness the power of these innovative approaches. This is a crucial step toward creating a greener, healthier, and more equitable world.
The financial crisis of 2008 deeply damaged the credibility of financial innovation in the general public’s mind. As the collapse of markets dried up credit across the system, the notion that securities such as collateralized debt obligations and credit default swaps are enablers of growth suddenly seemed implausible, if not deluded. Indeed, those instruments are often described today as weapons of mass destruction.
