This report, written by Samhita in partnership with ICNL, reviews Social Stock Exchanges in Brazil, Portugal, South Africa, Jamaica, the UK, Singapore, and Canada. It provides general takeaways, as well as detailed analyses on various issues. Based on these findings, the report analyses the SSE recommendations proposed by India’s SSE Working Group and provides some additional suggestions.

Social Stock Exchanges (SSEs) are regulated institutions that aim bridge the gap between the social sector and private capital by providing a platform through which donors and investors can fund and facilitate the growth of organizations that have a social purpose. Brazil instituted the world’s first SSE in 2003, with the establishment of Bolsa de Valores Socioambientais (BVSA). Since then, stakeholders in several countries – including South Africa, Portugal, Canada, the UK, and Singapore, all of which are discussed in the report – have instituted social stock exchanges. These SSEs have aspired to harness the resources of financial markets and private capital to combat some of the most pressing social and environmental issues of our time.

Finding from the report’s country reviews include the following:

• SSEs have struggled to establish and sustain themselves; of the handful that have existed, about half are no longer in operation due to financial and other structural challenges.
• SSEs may perpetuate funding imbalances in the social sector due to a preference for issue areas that are more visible and lend themselves to revenue streams (for instance, environmental projects tend to feature heavily, while projects related to mental health or gender issues are less common).
• While SSEs generally allow both retail (individual) and institutional (foundation/legal entity) investors, institutional investors are more common due to limited opportunities and regulatory restrictions on individual investors.
• SSEs have struggled with capturing social impact and measuring their own efficacy.
• Most SSEs allow both for-profit and non-profit organizations to list; high barriers to entry may make it more difficult for nonprofits, particularly smaller or grassroots groups, to meet listing criteria, leading to further skewing of resources towards established NPOs and for-profit organizations.
• Design of an SSE and the relevant regulatory regime, undertaken in consultation with civil society, can help to alleviate some of these issues, and better fulfill the promise of an SSE as an alternative fundraising mechanism for nonprofits.

Policymakers undertaking design of an SSE, in India and elsewhere, should aim to:

• Define an SSE’s mission as an agent of positive change. This serves to distinguish it from traditional stock exchanges. An SSE should be participatory and representative with respect to civil society, independent from other institutions, and be designed, in consultation with the nonprofit sector, so as not to detract from existing funding models.
• Bridge inequalities in access to capital by providing training and financial support for nonprofits (particularly smaller ones), separate, tailored platforms and requirements for nonprofits versus for-profits, and instituting other incentives like additional tax benefits for nonprofits and donors.
• Promote under-resourced causes in consultation with civil society, periodically featuring thematic areas in need of support, including projects relating to marginalized groups and communities.
• Ensure a sustainable financial model for longevity, actively engage investors and donors to achieve scale and sustainability and bringing individual and smaller donors into the fold.
• Consciously measure the impact of listed projects and the SSE itself, by instituting effective reporting metrics and engaging independent evaluations.

In order to improve the chances of success and significant impact, such decisions should be taken in consultation with a representative segment of the non-profit sector. ICNL and Samhita remain available for discussion and feedback on the report. We welcome the submission of additional information on Social Stock Exchanges at asia@icnl.org.