The opportunity to recycle the proceeds is one of the supposed social goods of social investment. The idea is that the investment generates cash which is then used to repay (plus a financial return) the investor. By repaying the investor, the thinking goes, you enable him or her to do further good work with the money. Assuming of course that the social investor isn’t using the proceeds to buy a yacht or fund his or her pension.

So, bingo! The money has been used twice to achieve social impact!

What’s often forgotten is that by repaying the investor, cash is being withdrawn from the investee.

Arguably, if the investee had retained the money (ie, loan converted to a grant), the investee would be recycling the funds itself into further good works. So, bingo! The money has been used twice to achieve social impact! Except that the identity of the recycler is the investee, not the investor.

This is just one of the themes at the heart of Best to invest?, NPC’s guide to social investment for funders. At the launch last month, a respondent duly responded, explaining that an investor might want to make its capital work hard for a period, and perhaps be a bit flexible on mission, but then at the end of the period redeploy the capital elsewhere on a mission-critical project.

The example given was investing in the Golden Lane Housing Bond, designed to develop housing for people with learning difficulties. A nice fulfilling way to store capital, but in years to come the foundation in question might want the proceeds for a different social issue (eg, young offenders), or for solving a similar social issue in a different way (eg, campaigning for improved employment of disabled people).

I like another idea: that if a social investment is successfully repaid, the investee doesn’t need your money any more, because people are queuing up to buy new bonds issued by the investee. Prudence permitting, Golden Lanes borrows and borrows and grows and grows until everyone with learning disabilities is comfortably housed. Meanwhile, you, the investor, has been repaid and you are now on the hunt for another investee, or grantee, who needs your money more.

So the repayment process could be a way of directing funds to where its most needed at the point of recycling.

Anyone else got any thoughts on this?