New partnership to build Canada’s impact-investing marketplace

Canada, like many other jurisdictions, is at an innovation crossroads. The global economy is finding a new normal. Increasingly complex societal challenges are crippling communities, education, and health care systems and the environment. These challenges require a renewed commitment to innovation, not just in academia or in business, but in government and the community sector. Sustainable solutions to our most pressing problems will require new thinking and new ways of working together.

 

It is with this global context in mind that the Canadian Task Force on Social Finance released its seminal report last week, providing a national strategy to mobilize private capital for public good in Canada. The report sets out catalytic recommendations that call on institutional investors, corporations, philanthropists, foundations and governments to work together to build a robust impact investing marketplace in Canada. Impact investing is defined as proactively investing in businesses, organizations or funds that generate both a social or environmental AND financial return.

 

The report sets out seven key actions that Canada needs to undertake, in parallel, to mobilize new sources of capital, develop an enabling tax and regulatory environment, and provide social entrepreneurs with the needed business support to launch, operate and scale their innovative ideas.

 

Highlights from the report include:

 

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  Requiring Canadian public and private foundations to invest at least 10% of their capital (totalling $34B) in mission-related investments (MRI) by 2020, potentially unlocking $3.4B for social enterprise.

• Establishing a federal partnership with private, institutional and philanthropic investors to create the Canada Impact Investment Fund.

• Increasing the engagement of Canadian pension funds in impact investing through clarification of fiduciary duty and annual disclosure of impact investing allocations.

 

“A growing number of enterprising charities, nonprofits, co-operatives as well as social purpose businesses are turning to private investors for the financial support they need to launch new initiatives, and grow to make a bigger difference in their work. The barriers between profit and public purpose are breaking down – both here at home and around the world,” said Ilse Treurnicht, CEO of MaRS Discovery District and Chair of the Task Force on Social Finance. “The recommendations outlined in this report provide a framework for large scale change, and could, in combination, unlock the capital required to build prosperous, but sustainable communities for future generations.”

 

While Canada’s impact investing marketplace is relatively young, many of the critical elements are already in place to make this marketplace work: a new breed of investor who wants to earn money while making a positive impact on society, foundations looking for ways to invest endowment assets in mission-related opportunities, governments willing to look at innovative ways to spawn private investment for social good, and a vibrant community of social entrepreneurs, civic change makers and innovative social enterprises.

 

Launched this October by Social Innovation Generation (SiG), The Task Force on Social Finance is focused on reshaping the way we think about investing in Canada’s future. It will continue to advance this agenda, and review and report on progress against its recommendations.

 

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Geraldine Cahill is the communications coordinator at Social Innovation Generation (SiG) in Toronto.