Social Enterprises and Impact Investments: A study on challenges and perspectives of social enterprises and impact investors in Sri Lanka

The purpose of this paper is to explain the challenges faced by impact investors and social enterprises in realizing their goals and to understand the interconnection between these two key stakeholders. The research was motivated by the visible trending growth of several social enterprises and impact investing entities in Sri Lanka over the last few years. The research adopted a qualitative method and conducted interviews with key stakeholders of impact investors, social entrepreneurs, and social enterprise intermediaries. The study analysed themes that include business and financial knowledge of social enterprises, communication and alignment between impact investors and social enterprises, size and scalability of social enterprises, policy and regulatory issues, and impact measurements. The study found that social enterprises in Sri Lanka face multiple challenges that restrain their progress. In addition to the basic problems such as the lack of business acumen and lack of access to funds, difficulties in measurements and demonstration of impact, and scalability are also significant factors that affect motivations of the impact investors. This implies existence of a mismatch of objectives of the key stakeholders, which remains a key determining factor in the process of integration of the multiple stakeholders. The role of intermediaries in the process of narrowing the gap is paramount. There is a need for interventions in strengthening social enterprises in terms of ability to demonstrate financial and social impact. The study also envisions policy level interventions that could provide much needed impetus to this sector, which will improve the recognition and status of social enterprises, and thereby contribute to the achievement of sustainable development goals.