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New funding and financing models

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In an era of increasingly tightening funding of not-for-profits, and ever-present unmet social and environmental needs, new funding approaches are emerging.

Australia is beginning to adopt some approaches pioneered internationally, that seek to provide funding for activities that generate a positive social or environmental impacts. These approaches can include:

  • social or environmental impact investments
  • microfinancing
  • community finance
  • new lending practices, and
  • social impact bonds.

Many of these approaches offer blended return - a financial as well as social or environmental impact.

Each of these approaches raise legal issues for not-for-profits. In particular, for a not-for-profit to be able to seek impact investors, it must set up a structure that can attract investors. Not-for-profits cannot attract equity investors, and not-for-profits cannot be 'owned' in the same ways that for-profits can be (ie that cannot have shareholders). Similarly, not-for-profits cannot distribute profits. Therefore, legal structuring needs to be carefully considered if a not-for-profit wishes to be able to attract investors.

Our Social Enterprise Guide steps through legal structuring in more detail, including hybrid structuring that can enable not-for-profits to benefit from equity investors.

Not-for-profit Law delivered a webinar in April 2015 with Allens and NAB, comparing traditional funding approaches with new funding approaches, and outlining the key legal considerations. View the webinar here:



Extra Resources

The following websites have more information on new funding approaches for not-for-profits:

Last Updated: 28 April 2015

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