When Javara founder Helianti Hilman traveled to remote parts of Indonesia, she met farmers and communities struggling to enter the commercial supply chain to reach markets. Her social enterprise Javara was born.

Javara is made possible because of “impact investors,” or companies that fund enterprises to generate social or environmental impact alongside a financial return.

Today, Javara sells food products like organic snacks, handicrafts and heritage varieties of rice, produced by communities in poorer parts of Indonesia, in the competitive marketplace.

This is “social finance” in action. And it’s a new and powerful way to achieve sustainable development. Social financing is ushering in a new era of sustainable development around the world.

However, it’s very much in its infancy in Indonesia, so if you’re wondering what social finance is, you’re not alone.

It refers to bringing capital or investment to enterprises that produce social and environmental benefits as well as financial profits. Social finance covers various forms of private funding for social enterprises (SEs), such as impact investors, angel investors, crowd funding or venture capital.

For example, the World Bank estimates that by 2025, crowd funding could reach US$96 billion, a fundraising concept that shows great potential.

In practice, the United Nations Development Programme (UNDP) last year launched “Bring Water for Life,” a successful campaign to bring clean water to a community in East Nusa Tenggara. The campaign drew on public figures, including actor Reza Rahadian and charitable Indonesians, who contributed a total of 350 million rupiah (US$26,274/K35.9 million) to build a solar-powered water pump in a dry village in Sumba.

Indonesia’s recently announced Human Development Index reveals enormous progress has been made, but vast inequalities exist.

To continue Indonesia’s development progress, we are working together with the people of Indonesia and the government to achieve Sustainable Development Goals (SDGs). If achieved, it will be the biggest accomplishment of the next decade – together we will eradicate poverty, reduce inequality and take real action to mitigate climate change.

Between $3 and $4.5 trillion is needed globally to achieve the goals. Current investment in healthcare, education, sanitation, access to energy and all the sectors covered under the SDGs is around $1.4 trillion, creating an average investment gap of about $2.5 trillion – approximately the gross domestic product (GDP) of South Asia.

Social finance has enormous potential to fill this gap. The greatest challenge hindering social finance is the disconnect between investors and social enterprises that rely on funding to thrive. Impact investors are expressing interest, but small enterprises are not always ready and capable to manage large funds.

An estimated 70 percent of social enterprises in Indonesia are in the pre-seed or seed stage and require only $10,000 to $100,000 to be able to grow.

Impact investors, by contrast, usually invest more than $100,000, hence targeting already established, larger and less risky social enterprises. Larger social investors will not touch investments below $5 million.

UNDP has a role in tackling this disconnect. Through our partnership with the Financial Services Authority we can advise the government on how to make the regulatory environment conducive. We are developing a fund that blends public and private funds. The goal is to attract $5 million in loans to a pipeline of 15 investment-ready social enterprises, many of which are run by women.

We are also working closely with ANGIN, Indonesia’s first and largest Angel Investment network, to help engage early investment and mentoring. There are tangible ways to nurture ecosystems that encourage more success stories like Javara.

Firstly, a legal definition of social enterprise would enable the government to raise its awareness as a sector and make it easier for entrepreneurs to attract investors looking for returns beyond the bottom line.

The capacity of social enterprises also needs to be built. Although support for social enterprises is growing, there is a limited number of important capacity-building structures.

Social entrepreneurship programmes could be created in regional government offices to provide training, support and even funding facilitation for social enterprises.

A third recommendation is to mitigate the risk for investors associated with small enterprises. An SME (Small and Medium Enterprises) Credit Rating Agency could be established to ease the loan interest rate for all SMEs.

Francine Pickup is the deputy country director of UNDP.