Financing regenerative enterprises

👉🏽 This story is developed as part of the Doughnut Economics for Policymakers guide.

Regenerative businesses often struggle to access finance within profit-maximising financial systems. Governments can help facilitate better access to finance through diverse approaches, including dedicated public funding, subsidising operational costs, leveraging private finance, and nurturing partnerships between investors and enterprises. 

Overview

Regenerative businesses prioritise ecological and social purposes while ensuring their enterprises are financially sound. However, accessing finance remains one of their biggest hurdles, as financial systems are currently dominated by profit-maximising and extractive practices. Governments can play an important role in helping overcome these financing barriers through multiple complementary approaches: 

• Dedicated public funding: Poland has a dedicated social entrepreneurship fund managed by its national bank that offers low-interest loans, while Ireland created a dedicated foundation that channels funding to designated social lending institutions in order to provide low-interest loans to social enterprises. South Africa provides grants and loans to grow cooperatives, Thailand offers grants and loans to registered social enterprises, and both Italy and Spain offer grants for businesses converting to distributive ownership structures like cooperatives. Malaysia offers dedicated funds to support capacity building and scaling of social enterprises. Through state-owned banks, Malaysia also provides low-interest and collateral-free loans to accredited social enterprises. The EU has a dedicated loan fund to increase social enterprise lenders’ lending capacity. 
• Subsidising and lowering operational costs:  South Korea subsidises labour costs of social enterprises. Multiple countries have tax reductions or income tax exemptions for social enterprises. Canada provides funds to social-purpose enterprises for market analysis, product development, business planning and training to help them become investment-ready for loans and equity investments.  
• Guiding and leveraging private finance: Bulgaria, France and Quebec offer tax benefits for investment into social enterprises or cooperatives. More than 20 countries have created social impact bonds where governments repay investors if agreed social outcomes are achieved; investments in these bonds are often tax-exempt, as in Portugal. Many governments also provide credit guarantees to reduce risk for financial institutions lending to social enterprises, such as in India, the EU and Malaysia. India and Malaysia have established Social Stock Exchanges to help social enterprises raise funds from the public. Ireland uses funds from bank accounts that have been inactive for more than 15 years to support social enterprises. Canada provides grants and zero-interest loans to investment managers who then invest in social finance intermediaries such as credit unions, community loan funds and private equity firms. Both the investment manager and the financial intermediaries use government funds to leverage private finance and provide loans, equity investment and credit guarantee to social-purpose organisations. 
• Nurturing partnerships between investors and enterprises : The EU provides training to social enterprise finance providers, and offers operating grants for social enterprise finance networks. Brazil has established an Impact Investment and Business Committee that provides a platform for investors and enterprises to build partnerships and identify ways to enable better access to finance.

Implementation

Governments at all levels can support regenerative enterprises to access finance, although sub-national governments often have fewer resources and policy tools available. Collaboration between different levels of government can be particularly effective: for example, cooperation between the EU and member states has enabled dedicated EU funding to be translated into targeted national support programmes in both Poland and Portugal. 

To qualify for government support and access funding, businesses typically need to meet certain criteria and sometimes have to undergo accreditation processes or competitive tenders. 

These financing approaches are most effective when deployed as part of a broader strategy to support regenerative enterprises, rather than as isolated interventions.

Impacts

Government support for accessing finance has proven crucial in enabling regenerative businesses to launch, grow, and survive challenging conditions.  For example, the Polish government's funding supported over 300 social enterprises to survive the impacts of COVID-19, disbursing 849 loans totalling €21.77 million by 2020. Between 2017-2025, Ireland leveraged nearly €10 million of private capital in dormant bank accounts to support around 1500 social enterprises. Between 2019-2024, Canada disbursed over $57 million to 1,160 social purpose organisations, of which 75% were women-led, 24% led by racialised people and 24% indigenous-led. Since 2023, Canada has also invested $755 million to strengthen its social finance market. Credit guarantees provided by governments have enabled social finance providers to invest in enterprises they could not have otherwise supported, due to their risk profiles under conventional financial assessment criteria. 

Challenges

• Risk of maintaining extractive mindsets: Financial support may inadvertently reinforce conventional business models if they prioritise financial returns over genuine transformation. For example, impact bonds that focus narrowly on measurable short-term outcomes may discourage enterprises from pursuing deeper systemic change. Credit guarantees may simply extend conventional lending criteria without fundamentally challenging how financial value is assessed.
• Limited influence on mainstream financial systems: Without complementary efforts to transform mainstream financial systems, government support may enable some enterprises to survive without addressing the structural barriers that make support necessary in the first place.
• Burdensome application processes: Extensive documentation, financial reporting, and administrative requirements create specific barriers for enterprises who are under financial strain, or community-led initiatives with limited professional capacity.
• Defining appropriate eligibility criteria: Narrow, rigid eligibility criteria can create onerous application processes and exclude smaller enterprises, while overly broad or flexible criteria leave the door open for enterprises with minimal social or ecological commitment to access support.

Reference and further reading

• Enabling Indigenous Trade: Actionable Guidance for Governments: World Economic Forum, (2025).
• Legal frameworks for the social and solidarity economy: A comprehensive OECD analysis from 2022 - see page 32 on financing.
• European Funding possibilities for Social Enterprises: EU website

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