Social Finance for Sustainable Development

This chapter reconceptualizes social finance through a broad sustainable economic development lens that extends beyond increasing gross domestic product (GDP) as the definition of economic development. In integrating social finance, the chapter introduces a triangular framework that connects philanthropy to traditional business and adds mutual aid as a distinct dimension for using social finance to improve a community’s total factor productivity (TFP). The framework demonstrates how various approaches to using social finance can address market, government, and philanthropic failures to address social issues while improving economic productivity. Social financing can enhance economic development by fostering social trust networks and encouraging industrial clusters. Using social financing approaches that emphasize community decision-making and self-organization, and cultivating the social infrastructure necessary for managing common-pool resources, will foster sustainable development.