Asset-Lock: A rule which prevents the residual assets of the society being distributed to members. If a society has an asset lock, its rules will usually specify what must happen to these residual assets; normally they are transferred to another asset-locked body with similar aims and objectives to the society that is being wound up. The society may be an organisation, typically a charity or social enterprise, whose governing documents legally prevent its assets from being used for private gain. Any surplus must be reinvested in the organisation's social mission.

BEM: Black and Ethnic Minoritised. This term is used by Pathway Fund to refer to communities that experience systemic disadvantage and marginalisation due to their race or ethnicity.

Blended Finance (products)/ Blended Deals: A mix of investment - part repayable finance and part grant. Specialist social investors and grant makers may offer this, but you can also source blended capital yourself by applying for both grants and loans. Involves the strategic use of public or philanthropic capital (like grants or first-loss investments) to reduce the risk for private or commercial investors, thereby unlocking larger pools of capital for social impact.

Blended Finance (structures)/ Blended Finance Vehicles: This occurs at a fund level where concessionary capital like grant, guarantees or tax reliefs is blended or mixed with the non-concessional capital which is then used to provide repayable finance to businesses, social enterprises and charities. 

‍By, With and For organisation: Organisations whose governance, leadership and team are intentionally majority BEM-led and that align with/ contribute to racial equity and anti-racist principles. Pathway Fund is led by, with and for BEM communities, and supports aligned by, with and for partners, such as BEM-led intermediary organisations (IMOs).

‍Combined Authority, now Strategic Authority (CA): A legal body in England that allows a group of two or more local councils to collaborate and take collective decisions across council boundaries.

‍Catalytic Capital: Is investment capital that is patient, risk-tolerant, concessionary, and flexible and is an approach used to support impact-driven enterprises that lack access to capital on suitable terms and to unlock impact and additional investment that would not otherwise be possible.

‍Community Development Finance Institutions (CDFI): CDFIs are private financial institutions that provide affordable loans and support to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies.

‍Co-investment: Investment in a project or fund alongside and often, but not necessarily, on the same terms as other investors.

‍Community Interest Company (CIC): A Community Interest Company (CIC) is a type of limited company whose profits are reinvested in the mission of the organisation to benefit the community, instead of private shareholders. There are different types of CICs; they can be limited by guarantee or limited by shares. A CIC limited by guarantee is a company which has no share capital and cannot pay dividends. A CIC limited by shares has capital that is divided into shares for individuals to invest in. 

‍Concessional Finance: Loans or investments offered with more favourable terms than market rates, such as lower interest rates or longer repayment periods, to support organisations with a social mission.

‍DA / Dormant Assets: The Dormant Assets Scheme unlocks money from forgotten bank and building society accounts, if these lost funds cannot be returned to their owners, money can be transferred to the Dormant Assets Scheme to be distributed to defined recipients who fund social and environmental initiatives

‍Debt Finance: investment with the expectation of repayment (usually with interest). Debt finance usually takes the form of loans, both secured and unsecured, as well as overdrafts and standby facilities  (e.g. bonds or loan notes). Generally, debt financing requires a borrower to repay the amount borrowed along with some form of interest, and sometimes an arrangement or other fee.

‍Endowment: A long-term fund established to provide a sustainable source of income for an organisation's mission. Pathway's endowment is designed as a "spend-down" fund, meaning both the principal and returns will be deployed over its lifecycle.

‍Equity Investment: investment in exchange for a stake in an organisation, usually in the form of shares. Each share represents ownership of a proportion of the value of the company and typically provides the shareholder with voting and dividend rights. Equity finance is permanently invested in the organisation which has no legal obligation to repay the amount invested or to pay interest. Equity investors expect to receive dividends paid out of the organisation’s earnings available for distribution and/or capital gain on the sale of the organisation or on selling their shares to other investors. 

‍First Loss: it is possible to have different tiers of investors so that one set of investors accepts that, in the event that the investee suffers financial difficulties, it will lose the money it invested before any of the other investors lose any money. This investor will bear the ‘first loss’.

‍Fund: a collective investment scheme that provides a way of investing money alongside other investors with similar objectives on a pooled basis. This often provides individual investors with access to a wider range of investments than they would be able to access alone and may reduce the costs of investing due to economies of scale. Funds are managed by fund managers for a management fee on behalf of investors.

‍Grant: a conditional or unconditional gift of money with no expectation of repayment. Some grants may be structured as ‘repayable’ or ‘partially repayable’ grants, where part of whole of the grant money may be returned to the funder upon achievement of pre-defined milestones (such as achieving fundraising milestones); however, unlike return seeking investment capital, repayable grants do not expect or incur any interest.

‍High-Net-Worth Individual (HNWI): a person who a) has an annual income of £100,000 or more; b) net assets of £250,000 or more. 

‍Intermediary Organisation (IMO): In the context of this document, it refers to organisations (often BEM-led) that act as a bridge between Pathway Fund (the wholesaler) and frontline charities and social enterprises. They help deploy capital and provide support within specific regions or communities. They may be an organisation that provides, facilitates or structures financial investments for social sector organisations and/or provides investment-focused business support to social sector organisations.

‍Institutional Investors: organisations making investments e.g. pension funds or insurance companies.

‍Investment mindset: a lens that Pathway applies in reviewing IMO applications and expects IMOs to apply in reviewing funding into enterprises. In applying this lens, the reviewer considers the potential for both financial performance (including financial resilience, income diversification, sustaining enterprise growth and profitability) as well as social impact.

Investment Readiness: an organisation, or a collective of intermediary/ infrastructure organisations (IMOs) in a place, having the systems, processes and business model to be able to attract investment

‍Junior Debt: Also known as subordinated debt, this is because this type of finance has a lower priority of repayment below that of other investors. It is therefore potentially riskier for investors and as a result usually carries higher rates of interest.

‍Philanthropic Capital: Capital offered for investment which focuses more on the impact that an organisation is delivering on instead of the potential return of investment. As a result, this type of capital is usually able to tolerate making higher risk investments. 

‍Principal: a sum of money lent or invested, on which interest is paid or earned (or the balance of a loan, net of interest and amounts repaid).

‍Racial Equity Lens: An analytical approach to investing and decision-making that actively considers and aims to address the systemic barriers and racial disparities faced by BEM communities.

‍Repayable Finance: money that has been provided to you to use which you’ll need to return on certain terms at some time in the future.

‍Residual Funds: money that is left over at the end of the fund or programme, through the repayment of capital from the enterprises and, in the case of blended finance vehicle, after the IMO has repaid the co-investors as well as finished paying its own operational costs. Every programme with repayable grant and every blended finance vehicle will not have residual funds, for example a blended finance fund may only have residual funds if it overperforms to such an extent that even after repaying all co-investors their maximum return it still has capital left over.

‍Restricted Funds: funds (often grants) that can only be used for a specific purpose or project and cannot be used for other purposes. These can also be referred to as ring-fenced or earmarked funds.

‍Social Enterprise: a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

‍Social Investment: The provision of finance to organisations with the explicit expectation of a social, as well as a financial, return.

‍Strategic Mayoral Combined Authority (SMCA): Is a governing body in England led by an elected mayor, formed by a group of local councils working together to make decisions on regional matters like transport, housing, and adult skills. These authorities drive regional economic growth through devolution deals, receiving powers and funding from the central government to develop strategic plans and deliver local objectives.

‍Subsidy Control: all applicants to Pathway must demonstrate an ability to comply with the Subsidy Control Act 2022. A government guidance on subsidy control rules and requirements is accessible here.

‍Technical Assistance (TA): Non-financial support provided to organisations to build their capacity, such as training in governance, financial management, business planning, and leadership.

‍Theory of Change (ToC): A process for thinking about an organisation or project’s ‘story’; a theory of change is a great way to clearly articulate the social impact you want to deliver. It encourages developing a clear plan for how to help to address a social need in your community and how change happens in the short, medium and long term. Theory of change is often associated with some sort of visual map but could also be set out as a set of tables or charts.

‍Unrestricted Funds: funds that can be used however and wherever an organisation needs to further its objectives.

‍Wholesaler: an investor which makes larger investments in funds or financial organisations (social investment finance intermediaries) that will themselves invest smaller amounts in several charities and social enterprises.

‍Youth: people aged 10-19 years, or those up to 25 years of age with Special Educational Needs and Disabilities (SEND).