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Sunday, December 5, 2010

Canada’s Task Force on Social Finance: The Report Launch

Canada's Catching Up (Take Two) 

When I try to explain what I am passionate about to individuals who are unaware of the social innovation movement, I am usually met with utter confusion. Those puzzled faces really come alive when I begin my rant about social finance. 

Before I begin discussing last Tuesday’s groundbreaking event at MaRs Discovery District, I thought a good way to begin this post would be to explain what social finance actually means. Socialfinance.ca created an extremely comprehensive explanation of social finance. I suggest you take a few minutes to watch this video so that the next time you hear about new modes of finance for Canada’s social sector, you'll be ahead of the game! 




 Several weeks ago, I expressed my excitement about the creation of the Task Force on Social Finance in Canada.  If you recall, I titled the post "Canada's Catching up", since until then, we had not made strides in leveling ourselves with other countries' progress on social finance.  The creation of the task force was the first step, and I believe the event last Tuesday signified reaching the second milestone toward an active social finance market in Canada.

Last Tuesday, November 30th, I found myself surrounded by people who are not only interested in the ideals of social finance, but also genuinely believe in its importance and impact potential.  The Task Force on Social Finance launched its first report, entitled "Mobilizing Private Capital for Public Good".  The report outlines the need, challenges, and opportunities for a social finance marketplace in Canada and provides 7 recommendations on how to overcome them.  While each of these recommendations go into some depth, I thought a one-liner on each of the seven goals would provide a sufficient summary (though I do recommend you download the report!).

7 steps to building a Social Finance Marketplace in Canada:

1. All Canadian foundations should invest at least 10% of their capital in mission-related investments by 2020. (Right now they are only required to invest 3.5%!!)

2. The federal government should partner with private, institutional, and philanthropic investors to establish the Canada Impact Investment Fund.

3. Investors, intermediaries, social enterprises, and policy makers should collaborate to build new bond and bond-like instruments.   

4. Canadian governments should mandate pension funds to disclose their responsible investing practices and provide incentives to mitigate perceived investment risk.

5. Policy makers should explore the need for new hybrid corporate forms for social enterprises (example from the UK: Community Interest Company).

6. A Tax Working Group should be established to develop and adapt proven tax-incentive models to encourage lower-cost investments for social enterprises to maximize impact.

 7. The eligibility criteria for government sponsored business development programs should be expanded to include the range of social enterprises  (see page 4 of the report for a great diagram of this range.)

While I will definitely be summarizing more important pieces of this report in the future, I thought this would be a good way to introduce its purpose.  As cheesy as it sounds, I sat at the event and truly felt part of something niche that I know is going to be a huge part of Canada's economy in the future. It will not be an easy or short process, but the plan is there.  If we can make each of these recommendations a reality, Canada will  be the country chased by others.

I'm excited to see where this goes, and will most definitely continue sharing as it evolves.


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