As capital gains become more difficult to come by in bear markets, dividends are becoming more important for investors these days.

But one organisation is promoting the concept of social dividends rather than the straightforward financial kind.

Clann Credo, an organisation advocating the use of private finance in the voluntary and community sector, describes itself as an accessible source of capital to small and medium-sized projects which often get turned down by traditional lenders. With every investment, Clann Credo seeks a social and a financial return. To date, the organisation has invested €4.5 million in more than 80 projects in areas such as community infrastructure, community enterprise, employee ownership, social housing, job creation and community loan funds.

The majority of the funds invested has been in the form of loan finance, according to Mr Paul O'Sullivan, chief executive of the organisation. Interest rates depend on an assessment of the risk attached to individual projects, he says, but are typically between 5 and 10 per cent.

When projects become bigger and more commercially viable as a result of Clann Credo's seed capital, the mainstream banks become more friendly and get on board, Mr O'Sullivan notes.

Clann Credo also takes equity stakes in companies, when it is more appropriate. For example, it is a stakeholder in Heron Quality Foods, based in Bandon in west Cork.

Now Europe's largest producer of organic gluten-free products, Heron started life as a small bakery trying to establish a workers' co-operative with the aid of development and training agency FÁS, which approached Clann Credo for help.

Having identified its niche, the company now supplies gluten-free biscuits, breakfast cereals and cake mixes to SuperValu, Superquinn, Dunnes Stores and Sainsbury in Britain.

Mr O'Sullivan says Clann Credo is constantly looking for ways to receive a reward for its risk without landing organisations with a heavy debt burden from their inception. One way of doing this is to purchase premises for the business and lease it with an in-built purchasing option. Under an agreed structure, both the business and Clann Credo will benefit from capital appreciation on the property. "Organisations that have a mortgage on their premises are totally constrained on the amount of money they can get," Mr O'Sullivan says.

"One of the things banks would do is seek personal guarantees from all the board members," he says.

"When there is a board of 10 people looking for €100,000, they might say we can guarantee jointly and that's only €10,000 each. But what the bank can say is 'you're the highest net worth individual, it's much easier for you to guarantee the full €100,000'."

As a result, people involved in community projects seeking to expand through commercial activities often find themselves putting their own assets at risk.

Mr O'Sullivan prefers to call Clann Credo's activities socially directed investment rather than socially responsible investment, or SRI. This is a term used to describe stock market funds that exclude certain companies on ethical grounds, but insist that the potential for financial growth is not compromised.

Last night, Clann Credo held a conference in Trinity College, Dublin, highlighting the organisation as a source of finance for the voluntary and community sector.

The US-based community development organisations it models itself on seeks support from individual investors. "We're not at that level yet, but I think it will happen," says Mr O'Sullivan.