By
Originally published in socialfinance.ca
Canada, like many other jurisdictions, is at an innovation crossroads. Governments are faced with tough choices as the global economy finds a new normal, against the backdrop of increasingly complex societal challenges crippling communities, education and health care systems, and the environment.
These challenges require a renewed commitment to innovation, not just in academe or in business, but in government and the community sector. Sustainable solutions to our most pressing problems are unlikely to come from a single person – scientist, business guru, political or non-profit leader – or a single institution or currently favoured sector. These solutions will require new thinking, new models of collaboration, and new working partnerships between the public and private sector.
In this context, I am excited to announce that Social Innovation Generation (SiG), a national project partnered with MaRS, has launched an independent Task Force on Social Finance. This effort is modeled after the UK’s Social Investment Task Force, chaired by Sir Ronald Cohen. The UK Task Force played a key role in catalyzing that country’s social finance marketplace a decade ago, influencing the investment of significant government and private capital in a new breed of funds building blended value enterprises. Similarly, the Canadian Task Force, which I am proud to Chair, aims to help accelerate the development of a vibrant social investment sector focused on addressing social and environmental challenges in Canada.
Over the past decade, social finance, also referred to as impact investing, has picked up steam globally, from microfinance to new social co-operatives and community development instruments, and from next generation CSR to venture philanthropy and social venture capital. Today, it is widely recognized that this emerging asset class has the potential to mobilize very significant amounts of private capital and put it to work in new ways for social purpose.
At MaRS we are passionate about supporting entrepreneurs and the emerging enterprises that renew our economy to create rewarding jobs for future generations. Our work focuses on converting important ideas generated in academic labs, garages and home offices into new companies, and into solutions that will improve the quality of life of Canadians and others around the world. This is not just about technology. We are equally passionate about scaling new ideas that tackle the more amorphous social challenges we face. Over the past 5 years, MaRS has advised upwards of 550 social entrepreneurs, working with them to get long-term unemployed into the workforce, reduce bullying in schools, strengthen support for caregivers, support sustainable food systems programs and much more.
This work confirms the high level of creativity and enterprising energy bubbling in the social sector, particularly among young entrepreneurs. However, it also highlights the significant structural and investment barriers that often confront social entrepreneurs as they attempt to maximize the impact of their efforts. Access to risk capital is a critical hurdle, since these ventures often do not neatly fit the investment criteria of traditional funding sources, and the funding climate even for young tech companies is at an historic low.
While Canada’s impact investing marketplace is nascent, a number of factors are coalescing to advance this initiative:
- Growing interest among investors to generate both a financial return and have a positive impact on society
- Foundations looking to enhance their impact by investing a larger portion of endowment assets in mission-related opportunities
- Governments willing to look at innovative ways to catalyze private investment for social good
- A thriving social business and enterprise sector poised for growth
- Existing hot-spots of social finance activity across Canada — and many innovative new projects under development
I feel honoured to be working on this Task Force with some of Canada’s leading business and non-profit minds—many themselves social entrepreneurs, investors and social finance pioneers drawing on years of experience raising capital, running organizations and working with entrepreneurs. The list of core members of the Task Force demonstrates a strong interest and commitment across the country, and represents a unique opportunity to build an enduring network.
The Monitor Institute phrases this imperative well:
“There are moments in history when the needs of an age prompt lasting, positive innovation in finance. Evidence suggests that many thousands of people and institutions around the globe believe our era needs a new type of investing.”
US Secretary of State, Hilary Clinton, similarly delivered a call to action last week:
“I also urge you to become involved with the social entrepreneurship movement, which is proving every day that there is money to be made through socially responsible investments. Putting financial and social capital to work is one of our goals.”
Here in Canada, we are not alone in heeding this call. In their recent launch of the newly designed Globe and Mail, the editorial was clear, “Governments need to open more public services to charities and social enterprises – the organizations that bring in revenues, even running profitable enterprises, and then channel the surplus back to the community. They need every opportunity to expand their work.”
Canada’s former Prime Minister and Task Force member, Paul Martin, articulates the opportunity as follows:
“We have had tremendous success in Canada in unleashing business to create wealth. We have learned that entrepreneurship is an unbeatable force. Government unleashed the power of business entrepreneurs when it provided them with needed public goods and functioning capital markets. Government needs to do the same for social entrepreneurs by providing them with the wherewithal to succeed.”
I believe the time is ripe for social finance to move onto Canada’s innovation agenda as a critical driver for our country’s future prosperity and the well-being of its citizens. By building a new kind of cross-sector coalition, we can make great strides in cementing the critical infrastructure, removing the barriers, stimulating the formation of new pools of capital, and supporting the innovative enterprises that will move the market forward. However, it will take bold leadership in government, the finance community and in the social sector, if Canada is to become a leader in this global movement.
This week marks the public launch of the Task Force, however research and consultation to distil learning from national and international activities has been underway for several months, in support of the development of actionable recommendations that will be released by December. Between now and then our Task Force members will be usingSocialFinance.ca as a platform to profile issues being explored by the group. I look forward to your participation in this important conversation.
Visit Task Force on Social Finance for more information about the initiative and its members.
Photo credit: http://www.flickr.com/photos/bertwerk/2821951515/in/faves-marsdd/
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