Introduction
In recent years, mainstream investors have begun to prioritise the social and environmental impacts of investments almost as much as financial returns. The growing popularity of impact and social investing* reflects a trend towards more responsible and values-driven investment practices. For many social enterprises and non-profit organisations (NPOs), now is the right time to pursue sustainable, large-scale funding.
Traditional donor-based models often offer only fragmented, short-term funding. These models are inadequate to tackle large-scale societal challenges, particularly those posed by global issues such as climate change. India established the Social Stock Exchange (SSE) to address this funding gap. This platform connects investors looking to make a significant impact with NPOs and for-profit enterprises (FPEs) alike.
What is the Social Stock Exchange?
The SSE is a platform for eligible social enterprises – both NPOs and FPEs – to register itself and to raise funds on a recognized exchange platform. To be eligible, social enterprises must be engaged in activities that benefit underserved or underprivileged segments of the population or regions exhibiting lower development (per relevant central or state government priorities). The enterprises must also demonstrate their commitment to creating positive social change (NSE n.d.).
Key features of the Social Stock Exchange in India (NSE n.d.)
- Eligibility criteria: As mentioned, eligible social enterprises must demonstrate a commitment to social impact. At least 67 per cent of their revenue, expenditure, or beneficiary base should be linked to activities benefiting target communities, which should consist of underserved or underprivileged communities.
- Participant type: Participants can be either FPEs or NPOs. FPEs are eligible to issue debt securities or equity shares, while NPOs can issue securities such as zero coupon, zero principal (ZCZP)** bonds and development impact bonds (DIB)***.
- Transparency and governance: Registered entities must meet standardised impact reporting criteria and must publish yearly financial and social performance reports.
- Fundraising mechanisms: While FPEs can draw on debt and equity investments, NPOs can raise money through grants, impact bonds, and ZCZP instruments.
Benefits of using the Social Stock Exchange
- For social enterprises:
- Increased funding options: The SSE provides organisations access to alternative funding sources beyond traditional donations and CSR grants, as it attracts investors with the shared values of measurable social impact and financial returns (KPMG 2020).
- Increased credibility and visibility: Being listed on the SSE denotes a commitment to transparency and impact-driven business strategies.
- Minimal registration cost: The low registration and listing fees of the SSE offer savings for issuers, investors, and donors.
- Project-specific fundraising: Social enterprises, especially NPOs, can issue instruments such as ZCZP bonds tied to specific projects or social outcomes on the SSE. This enables targeted funding and offers greater transparency on the utilisation of proceeds (Zerodha n.d.).
- For investors and donors:
- Aligned investments: The SSE imposes accountability and promotes causes with shared values to investors.
- Tax benefits: Certain investments in social enterprises may be eligible for tax exemptions under India’s Income Tax Act, 1961.
- Impact measurement: Investors receive comprehensive impact reports that assure them of the tangible outcomes of their investment choices.
Case studies: Successful impact investments through the SSE
Unnati Foundation, a Bengaluru-based NPO, was among the first to raise funds through India’s SSE, securing nearly INR 1.8 crore from high net-worth individuals (HNIs). These funds supported its vocational training programme to improve the employability of underprivileged youth. Unnati’s successful fundraising highlights the SSE’s capacity to enable social enterprises to attract impact-driven investments (Tiwari 2023).
Global examples
The SSE concept first emerged in 2003, with the establishment of Brazil’s socio-environmental impact exchange, Bolsa de Valorous Socioambientais (BVSA), a pioneering impact investment platform. This led to the establishment of several other SSEs, listed below with their year of inception:
- South Africa’s Social Investment Exchange (SASIX) (2006)
- Portugal’s Bolsa de Valores Sociais (BVS) (2009)
- the United Kingdom’s Social Stock Exchange (SSX) (2013)
- Canada’s Social Venture Connexion (SVX) (2013)
- Singapore’s Impact Investment Exchange (IIX) (2013)
- Jamaica’s Social Stock Exchange (JSSE) (2018)
Of the seven SSEs listed above, only three – Canada, Singapore, and Jamaica – are still active. The others – those of Brazil, South Africa, the UK, and Portugal – have shut down, testifying to the difficulties in ensuring sustainable investment flows.
A major challenge that SSEs in other countries have faced is building a self-sustaining, long-term financial model. Many of them started with strong philanthropic backing, but they struggled to transition into independent, revenue-generating platforms. Unfortunately, their funding structures were not enough to keep them afloat in the long run.
In contrast, Canada’s SVX has managed to remain not just open but profitable by charging listing and consultation fees. Jamaica’s SSE is still in its early days, but it is working toward self-sufficiency already.
Conclusion
SSEs offer an innovative route to assured impact investment, linking social entrepreneurs with investors with shared values of social change and financial gain. SSEs can boost investors’ credibility, help them attract long-term financing, and promote accountability by providing a regulated and transparent platform. As the world shifts toward value-driven, responsible investing, India’s SSE has the potential to transform its financial sector by supporting companies with a measurable and sustainable social and/or environmental impact.
While making values-aligned funding more accessible for social entrepreneurs, India’s SSE will help impact investors identify appropriate investment opportunities. It’s a win-win and may help reduce the government’s burden in ensuring sustainable development. Of course, to retain relevance, the SSE must continuously innovate and experiment with financial instruments such as social impact bonds and other outcome-based funding mechanisms. These products can attract diverse investors, strengthening the SSE’s role in mobilising capital for high-impact social enterprises.
By Kareena Jaisinghani, Senior Analyst, Climate And Sustainability Initiative (CSI). Views are personal.
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Footnotes
*Impact investing refers to investments in companies, organisations, and funds that generate a measurable positive social or environmental impact alongside their financial returns. Social investing refers to an investment strategy that seeks financial returns while meeting ethical, social, or environmental goals. Both involve choosing or avoiding investments based on ethical guidelines, often screening out companies that don’t meet impact or social goals.
**ZCZP bonds are dematerialised securities that neither repay the principal, nor accrue interest. They are issued through either a public offering or a private placement, with a minimum investment of INR 1,000 (revised from INR 10,000, per the latest SEBI circular dated 19 March 2025) and a minimum issue size of INR 50 lakh.
***DIBs are pay-for-success funding structures where grants are disbursed only if pre-agreed social outcomes are achieved. The NPO raises funds upfront from a ‘risk funder’, who bears the risk of non-delivery. If the project meets its targets, the ‘outcome funder’ reimburses the cost and the risk funder may receive a small return.
SEBI. (2025, March). Framework on Social Stock Exchange (SSE)
NSE. (n.d.). Social Stock Exchange (SSE). National Stock Exchange.
KPMG. (2020). Analysing the concept of social stock exchange in India
