Does this mean that equity investments from the social business fund will not cover its management costs and end up slowly depleting its funds?
No, the social susiness fund can charge the company which receives the equity an annual “management fee”, it can be 1% or so, depending on the actual cost of management. To keep the spirit of social business, the social business fund should try to keep it to a minimum. This regular payment should be negotiated at the beginning when a social business is trying to attract funding, and these fees should be clearly stated in the written agreement between the fund and the business. By recovering its fees, the social business fund will be able to disburse loans to other prospective social businesss.
