Key terms

A financial benefit recorded on a balance sheet, including properties, claims for money owed, cash, inventories, and property rights.

A snapshot of an organisation's assets and liabilities at a single point in time.

A formal contract to repay borrowed money with interest at fixed intervals, similar to a loan.

The rate at which an organisation uses or consumes money, indicating when it will run out of funds and helping manage sustainability.

Financial resources or money, including the cash and other assets held by an organisation.

The total amount of money flowing into and out of an organisation.

A commitment to take an action, made legally binding by inclusion in a contract's terms.

Investment with the expectation of repayment, usually as loans (secured or unsecured), overdrafts, or standby facilities, requiring repayment with interest and sometimes an arrangement fee.

A sum of money paid (usually annually) by a company to its shareholders from profits.

Investment in exchange for a stake in an organisation, usually in the form of shares, representing ownership of a portion of the company's value. Non-profit organisations are unable to access equity investment because they are not privately owned.

A strategy focused on selecting investments that avoid negative impacts on society and the environment, prioritising companies and projects that align with positive social and environmental values.

The process of providing funds for business activities, making purchases, or investing. Financing can come from a variety of sources, such as banks, investors, or personal savings, and can take different forms, such as loans, credit, grants, or equity investments.

Regular, unchanging expenses a business must pay, such as rent, salaries, and insurance.

Money given by individuals, organisations, or governments for a specific purpose.

A conditional or unconditional gift of money with no expectation of financial return.

A strategy that expands the pool of funds available for social and environmental purposes, encouraging innovative approaches to persistent problems. It recognises that the challenges facing society are too large and complex to be solved by government, philanthropy, and not-for-profit organisations alone.

Investments made into organisations, projects or funds with the intention of generating measurable social and environmental outcomes, alongside a financial return.

The different sources of revenue for a business, such as grants, sales, or fees.

When an organisation's expenses exceed its income.

Summarised accounting data (balance sheet, cash flow, and income statement) prepared for a charity's management and Board.

The costs of running an organisation, including fixed and variable expenses.

Payment by Outcomes (PBO) is a form of investing to help address long-standing social issues. PBO trials are designed to test the effectiveness of these investing contracts. How it works The government has committed $15.7 million from 2019-20 to 2026-27 to co-develop, implement and evaluate 3 PBO Trials in the social services sector. PBO is a form of social impact investing (SII) contract, between a funder and service provider. In the PBO Trials, the contract funder is the government. In the PBO Trial contracts, service providers are paid part of the contract fees upfront and part on achievement of agreed outcomes. This means the service provider takes on more of the risk for achieving the outcomes than under a traditional grant arrangement. The objectives of the PBO Trials are to inform: -the appropriateness and efficiency of PBO contracts -how to improve the design and use of robust outcome measurement -whether PBO contracts are suitable funding tools in social services -whether the policy focus areas tested are suitable for PBO contracts. The learnings will inform future potential funding arrangements and community sector reform. The 3 PBO Trials were co-developed and are being implemented and evaluated with service provider partners.

The money remaining after all expenses, including owner compensation, have been paid.

A financial statement showing income earned and expenses incurred over a year, revealing the profit (surplus) or loss (deficit) for that period.

Investments that typically involve the provision of capital that is structured as a loan, but with some equity-like characteristics, such as flexible repayment terms, performance-based returns, or the option to convert the loan into ownership shares. The goal of quasi-equity is to provide growth capital to businesses or projects that may not qualify for traditional loans or equity investments, while balancing the risks and rewards for both the investor and the recipient. Quasi-equity can be a risk capital alternative to equity financing for non-profits.

Funds an organisation has available to freely spend, excluding restricted income, endowment funds, and tangible fixed assets held for the organisation's own use.

Funds, often provided through grants, that can only be used for a specific purpose or project and cannot be used for other purposes.

The total income generated by an organisation, before expenses are deducted.

Financial resources available to support the startup, growth, and sustainability of social enterprises, including grants, donations, impact investments, loans, and earned income from various sources. The type of funding that any given social enterprise will be able to access will depend on its legal structure.

A way of investing money to create positive social or environmental impact, sometimes with the expectation of also generating a financial return. This can include investments in social enterprises, non-profits, or projects that aim to address social or environmental challenges. Can be understood as an overarching term that includes both grants and impact investment.

A financial tool that enables private investors to fund social impact projects, with the potential to earn a return if the project achieves its targeted outcomes. If the project succeeds in delivering the desired social or environmental results, the government and/or other actors ‘purchase’ the outcome, which enables investors to be repaid with interest. If the project falls short of its goals, investors may lose some or all of their investment. Social impact bonds are a type of ‘payments for outcomes’.

Often used interchangeably with ‘impact investment’. Sometimes used to specifically denote impact investments made to address ‘social’ challenges rather than environmental ones.

The provision and use of capital to generate social and financial returns. Often used interchangeably with ‘Social Finance’.

Social procurement is when governments, businesses, or other organisations use their buying power to achieve not only the best value for money, but also positive social, environmental, and community outcomes. In plain terms: - It’s about choosing suppliers and contractors not just because they can deliver a product or service at the right quality and price, but because they also create broader benefits. - These benefits might include providing jobs or training for people who are disadvantaged in the labour market (such as long-term unemployed, people with disability, or First Nations peoples), supporting local small businesses, using environmentally sustainable practices, or reinvesting profits into community programs. - For example, if a council needs catering for an event, they might hire a social enterprise café that employs young people who are at risk of homelessness. The catering still needs to meet price and quality standards, but the purchase also creates social value by helping those young people gain skills and employment. It’s essentially buying with impact, making purchasing decisions that deliver the required goods or services and contribute to wider positive change.

Funds that can be used for any purpose to further an organisation's objectives.