Sometimes looking over the wall at what your neighbours are doing to the landscape of their garden can give you ideas for your own. In this short article we have looked across the Atlantic Ocean to see how, in the last couple of years, the Canadian Social Finance sector has responded to community and governmental demand for increased active social investment from the private sector.
Towards the end of 2010 the Canadian Task Force on Social Finance issued a major report – Mobilising Private Capital for Public Good. The Premier of Ontario, Dalton McGuinty, defined the work as being to ‘…help social enterprise and social purpose business adopt social innovation business models; and develop recommendations to enhance public and private sector support for social finance to unleash its full potential in Ontario‘.
Download a pdf copy of the report here…
The report offered seven recommendations to the burgeoning Canadian sector…
1. The public and private foundations should aim to invest at least 10% of their capital in ‘mission-related’ investments by 2020. They should report annually on their progress.
2. The country should establish an Impact Investment Fund, supporting existing activity and encouraging increases in scale and new fund creation for the sector. Regions with no fund should be encouraged to create one.
3. New bonds and legislative change should occur, to foster and incentive flows of private capital tot he social finance sector.
4. Pension funds should deploy their assets into social investment, with government ensuring that the pension funds are mandated to do so, and to offer pension Funds incentives to balance and mitigate any additional risk.
5. Policy and regulation should change to support social revenue generating activities in the charity and not for profit sectors.
6.Tax incentives for social investing should be exploited, encouraging capital to be channeled to social enterprises offering maximum social and environmental impact with their activities.
7. Business development programmes, training and business support initiatives from central government should be tailored to specifically engage with social businesses and not just ‘mainstream’ SME organisations.
Whilst it can be argued, looking at the Canadian shopping list, much work of a similar nature has been started in the UK. However, the push towards incentivising pension funds, delivering mainstream flexed business support directly to the social sector and the adoption of a very broad and generous tax incentive led attitude to social impact investing would add new dimensions of transformation to the UK sector.
The report, Mobilising Private Capital for Public Good, develops the recommendations above and offers examples and capital forecasts for their deployment. Interestingly, the outputs recommended were assessed in a follow-up report one year after publication.
This action and output summary, Measuring Progress During Year One, shows that some 50 million Canadian Dollars (CnD) of new mission investment had been generated by the private sector. New government and private fund partnerships had created 284 million CnD of additional impact related investment, with some 215 billion CnD of assets under management by pension funds who are now signatories to the UN backed Principles for Responsible Investment.
Download a pdf copy of the report here…
The follow up report highlights some achievements and illustrates how the Canadian debate is starting to have a transformational effect of the country’s social impact investment landscape. In the final analysis there is still huge opportunity in this dynamic economy to take the social investment message forward.
In concluding the report illustrates a late 2011 survey on SME take up of government backed services for the SME sector. Only 5% of the SME survey clearly identified themselves as having social outcome considerations. 93% of the survey cohort expressed ‘ambiguity and confusion’ over social investment issues. With 2% of the government services used by those surveyed explicitly excluding non-profits and the social sector.
Canada has a long and successful history of not for profit and social impact development. These reports show that even with history, public opinion and buckets of radical thinking there is still much to be done.
……………………………………………………
