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MaRS has launched a series of white papers related to promoting social entrepreneurship in Ontario and enabling solutions to complex social problems.

The first white paper was focused on Social Venture Finance and the latest one is on Legislative Innovations. This blog details the content of the Legislative Innovations white paper.

This white paper was prepared by MaRS and Ogilvy Renault LLP with the primary objective of increasing capital directed at the community for delivering social and/or environmental benefits.

It also has two secondary objectives:

1. to simplify and clarify the legal structures and permitted activities by creating a new form of legal vehicle
2. to provide a brand for social enterprise, social finance and community benefit, thus providing legitimacy and enhanced profile for such activities.

Federally and in Ontario, there is currently no legal definition of a social venture, social enterprise or community enterprise and those social entrepreneurs operating social ventures have set up under a variety of different legal forms to accomplish their missions.

For MaRS, social ventures include both non-profit, revenue generating social enterprises and for-profit, social purposes businesses.

For this white paper, we recommend the use of the term community enterprise corporation (CEC) for ventures that achieve their primary social or environmental missions using business methods by applying market-based strategies to address social problems.  This definition is based on the work of Richard Bridge and Stacey Corriveau for the BC Centre for Social Enterprise:  Legislative Innovations and Social Enterprise:  Structural Lessons for Canada (February 2009).

In order to examine what could be, we start by examining what is and outline the current legal structure in Ontario and Canada:  for-profit corporations, not-for-profit corporations (NFPs), co-operative corporations and registered charities.  It’s a great primer for those new to the field and a wonderful refresher for the rest of us.

We also explore issues related to the use of a business trust as an intermediary — one of the many workarounds used by those trying to make money and make a difference.

The paper then addresses the rationale for choosing which legal structure is best for your purpose by asking the entrepreneur to consider the underlying nature and intent of profit-making activities of the operation and what the profits will be used for.

We then break down the answers to this question and consider the pros and cons of each structure based on the intention to make profit.  There is a terrific summary on the limits of each structure particularly as it comes to generating income.  It outlines the challenges faced by many and the risks to tax-exempt status if you actually make a profit.  For example, a NFP could lose the tax-exempt status if the “accumulated profits are beyond what the Canada Revenue Agency believes is required to operate the NFP or if such accumulated profits are for the purpose of funding future capital projects”.  Although social entrepreneurs can “find a way around” these challenges, they shouldn’t have to – we want to design a system that actually encourages people to make money and make a difference.

There are several pending updates to legislation in Ontario and Canada, which are outlined in the paper, along with what is expected. One such change has already happened since the publication of this paper.  Thanks to the efforts of our colleagues at Imagine Canada the disbursement quota for charities was recently lifted in the federal budget, an absolute step in the right direction.

We then look to the UK, where they’ve been operating community interest companies (CICs) since 2005 with about 3,500 currently in operation.  There’s a great opportunity to learn from our colleagues there – to find out what worked and what didn’t.  We have done this before, bringing thought leaders from both the UK and the US to Ontario to outline their experience so we can learn from it and accelerate our learning in Canada (see the Social Finance Forum for more information).

Let’s be clear, this is not an importation of the UK system, in fact there are many differences. For example, the UK has a “destination test” to determine where the profits will be directed from the revenue generating activities of charities, something we don’t enjoy in Canada. Rather, this is an attempt to bring the best practices to our social entrepreneurs, modified to meet our needs and reflecting the Canadian experience.

We do the same thing with the US discussing both low profit limited liability corporations (L3C) and B Corporations. If you’re interested in B Corporations (think: a set of ISO standards for social purpose ventures), join us on April 1, 2010 as the Sustainability Leadership Exchange, MaRS and several other partners, bring Jay Coen Gibert, B Corporation founder, to MaRS. Register here.

The paper then discusses program-related investments (PRIs). PRIs are a potential source of funding as we try to enable foundation to use their endowments (not just their grants) to support social purpose work.  See this blog from Causeway Coordinator, Adam Jagelewski for more on this topic.

We then offer an analysis of the pros and cons of the CICs and L3Cs in terms of their ability to attract investment, governance/oversight and implementation in Ontario.

Finally, we end the paper with a recommendation for Ontario and the federal government. An opportunity exists to capitalize on regulatory changes that have taken place in the UK and US and the experience they have gained implementing those changes. Their knowledge can be used as a base to effect change in Ontario that will assist social entrepreneurs to raise the necessary capital to scale their business activities.  Ogilvy Renault LLP and MaRS will present the recommendations in this white paper to the Ontario government and stimulate a dialogue between government leaders and policy makers, members of the social enterprise community in Ontario and those who have lead the way to hybrid corporate legal structures in the UK and US.

To reiterate, this paper is designed to “stimulate a dialogue” and we are pleased to have had the opportunity to conduct due diligence on the options currently available in Ontario for our emerging sector and what other countries have done to simplify the governance and operation of social ventures, provide them a brand and help them attract capital. Our recommended CEC structure may work for you or it may not, but having choices with respect to making money and making a difference should be what Canada’s all about.

Now it’s your turn, let’s hear what you have to say.

If you want to hear more about our work in social finance, social entrepreneurship and how it affects you, come along to our 2010 Information Session on Wednesday March 24. Here at MaRS from 8:30am, it will be jam packed with information and opportunities to get involved. Register today.

Bill Young at CIBC Presents Entrepreneurship 101

Since founding Social Capital Partners in 2001, Bill Young has been a fixture in the social finance scene in this country. After his own “ship came in” (Bill was CEO of Hamilton Computers),  he has been promoting individual social ventures (both non-profit social enterprises and for-profit social purpose businesses) and striving to determine how he can take his initiative to change the social hiring landscape in this country beyond the “interesting magazine article” stage.

On reflection, it appears the efforts of Social Capital Partners came in three distinct phases.

In the first phase, Bill supported four incredibly innovative social ventures with great potential to hire, and thus change the lives of, traditionally marginalized populations.

These ventures included:

Inner City Renovations, Winnipeg, Manitoba
Inner City Renovation is a general contractor and construction manager. It offers a complete range of services in the commercial and residential markets. Projects have ranged in size from a few thousand dollars to more than half a million dollars.

Atira Property Management, Vancouver, BC
Atira Property Management Inc. offers quality property management services for strata corporations, developers, rental properties, non-profit housing, and housing cooperatives in Greater Vancouver, British Columbia, Canada.

As one of the first mission-driven companies of its kind in Canada, Atira Property Management is a social enterprise that grew out of Atira Women’s Resource Society. All profits from Atira Property Management are used to fund the Society’s housing and support programs for women and children who are rebuilding their lives after domestic violence.

TurnAround Couriers, Toronto, ON
TurnAround Couriers is a professional and socially responsible bicycle courier service in Toronto. They have been providing “exceptional service at competitive rates” while changing the lives of at-risk youth since 2002. TurnAround Couriers recruits only at-risk youth for all its bicycle courier positions and back office staff. This affords job-ready young people a chance to gain the experience, confidence and financial means they need. But TurnAround Couriers is not a charity — it is a competitive, growing business with a heart.

Renaissance, Quebec
Renaissance is a charitable organization whose mission involves the professional and social reintegration of people having difficulties joining the labour market. It accomplishes this mission, in part, by operating a Montreal-based chain of second hand stores called Fripe-Prix. Every year, approximately 200 employment-training participants are employed in these stores for six months and then placed in private sector employment. The stores provide affordable clothing and household items to the community while creating employment opportunities for individuals with significant employment barriers. Renaissance is affiliated with Goodwill International.

What he accomplished in this stage was the proof of concept: that double bottom line ventures that transform lives and make money are possible. The problem – it was labour and time intensive and if we wanted to achieve scale we would have to think differently about the approach.

Phase 2

Bill then strategized about how to engage the for-profit sector. He was uniformly impressed with the people he met operating not-for-profit organizations. Their skills, dedication and commitment were honorable but it was also clear what they were lacking: access to capital and the rolodex to get it.

Then Bill discovered franchises and explored the opportunities they could provide.

He started with Active Green & Ross and added a new dimension to the employment training and placement landscape. His focus was on the needs of the employer, supplemented by the skills of the community services agency, such as the YMCA, that already have a job-ready pool of talent.

This turned out to be a great success so Bill expanded, adding other franchises like Mr. Lube, Nurse Next Door and WeCare.

But what he found next surprised him. Although he was able to provide attractive financing to those who used “social hires” it wasn’t long before the franchises discovered that this was the right thing to do – both for social reasons and because there was a strong business case there. The new franchisees were able to work directly with the YMCA who provided job-ready candidates and ongoing support. Bill’s financing “carrot” was no longer needed.

Cue light bulb! What we really need to do here is to change how HR function works at the entry level. Bill’s next vision: a 10-year plan that sees all FP500 reporting on social hires with existing placement agencies.

In phase 3, MaRS is very pleased to be working with Bill and Social Capital Partners to develop an HR tech algorithm focused on employment outcomes and engaging all the key stakeholders to affect this level of systems transformation.

Downloads and resources

For more information on this and other relevant topics and to answer some of the questions raised at the session, please see:

• a sample of social impact metrics on the TurnAround Courier website,
• 211 for information on how to link to community service agencies,
• the latest MaRS report on Legislative Innovations.

Weren’t able to attend the class? Need some notes or want to look something up? Click below for all of the goodies from the lecture. Watch the video and the slide presentation below.

• Class Summary: Lived it Lecture: Bill Young
• Video: Bill Young: Lived it lecture
  
• Join the Facebook Group: CIBC Presents Entrepreneurship 101
• Register to get the weekly email updates

CIBC presents Entrepreneurship 101 2009/10 – Week 21 – Lived it Lecture: Bill Young from MaRS Discovery District on Vimeo.

Marisa Fortune, Career Edge intern at MaRS

Career Edge Organization, a national not-for-profit, has worked with over 1000 employers across Canada to provide meaningful work experiences through paid internships for recent graduates, those with disabilities and internationally qualified professionals.

I’ve used Career Edge interns for several years now and have been very pleased with not only the quality of the interns but their passion for the opportunity they have been given – one not normally open to new grads.

Recently, Career Edge held their annual Achievement Awards at the Toronto Board of Trade offices. I’m very pleased to report that SiG@MaRS’ own intern, Marisa Fortune, received honourable mention for her tenure with us – one that recently turned into full-time employment with our team.

If you’re looking to hire entry-level staff with great education and commitment that more than makes up for their lack of experience, consider Career Edge Organization. Our nomination of Marisa is below so you can see what a difference she has made to our program.

Nomination of Marisa Fortune – Career Edge Intern – Honourable Mention 2010

Do you know what a social venture is? Marisa, our Career Edge intern does. She not only understands this emergent field, she has taken on leadership for profiling these social entrepreneurs and the organizations they run, through her development of the groundbreaking Social Venture Registry.

She has embraced the data management system, Salesforce, to help us understand the metrics we are achieving and how to effectively report on this to our funders.

She manages the planning needs of our expanding team and an over-scheduled director.

She continually seeks out opportunities for learning through additional research and then shares that information through her blogs.

She organizes, she plans, she represents us at events — all with a charming, engaging and delightful personality. Her grace and calm, professional manner makes her an extremely effective liaison between SiG and our community.

And there’s more: she also works hard to add value to our team through integration of her education in the areas of social justice and equity — qualities valued by both clients and her colleagues.

Marisa has been a delightful and dedicated member of the SiG@MaRS team and she wholly deserves this recognition.

Slow thinking in BC

“Conversation is a meeting of minds with different memories and habits. When minds meet, they don’t just exchange facts: they transform them, reshape them, draw different implications from them, engage in new trains of thought. Conversation doesn’t just reshuffle the cards: it creates new cards.” –Theodore Zeldin

I visited BC’s Sunshine Coast last month to attend the retreat, “Thinking Like a Movement.” It wasn’t by coincidence that our wonderful hosts and facilitators, Al Etmanski from the PLAN Institute for Caring Citizenship and his wife, Vicky Cammack – Founder and CEO, Tyze and Executive Director of PLAN – chose the Painted Boat in the beautiful Madeira Park for our learning.

The theme: Slow thinking.

Slow thinking is a tough challenge given the fast paced world in which we live and work. Social entrepreneurs need to take the time to stop and percolate while looking to collaborate, engage and scale. It is often in the quiet spaces that we do our best creative thinking. It doesn’t always help to rush in.

Thinking Like a Movement was a time to engage, learn, reflect, collaborate and share stories. Our story-telling guides were David Roche and Marlena Blavin. David is featured in the iconic National Film Board film, “Shameless: the Art of Disability,” directed by noted documentarian Bonnie Klein (to whom I was also introduced in my travels). David also has a brilliant live show that he performed for us entitled “The Church of 80% Sincerity” – a must-do experience should the opportunity arise.

Thinking Like a Movement involves multiple actions, time frames, scales and levels of engagement along with a commitment to multi-sectoral collaboration. Throw in trust, which within itself is challenging and transformative, add some vision and the possibilities are endless.

As social innovators and social entrepreneurs we look for impact, durability and scale. When we talk about scaling projects, initiatives or processes, we think about presence. It’s not just the law or an attitude change, it’s about disruption on a large scale while ensuring that the disruption does not destroy relationships in order to achieve its goals.

Let’s use this lens to concentrate on social enterprises for a moment. At SiG, we describe social enterprises as not-for-profits (NFPs) that have a revenue-generating stream. Social enterprises have multiple objectives:

• Achieve their social mission and program goals
• Earn revenue
• Increase distribution
• Achieve value
• Offer concrete results to their clients, partners and stakeholders

There are a variety of other outcomes that social enterprises will look for, including a shift in the organizational culture as well as a social or system change.

There has been quite a buzz around social finance lately and it came up during the conference too. Social finance mobilizes and leverages existing commitments while an enterprise looks for other capital. There is a galaxy of financial resources that enterprises can approach or look to for collaboration, including:

• Government – grants, tax, procurement
• Business investment
• Foundations
• Social Investors
• Donations.

It’s important to understand and mobilize these financial assets; move away from small scale silos to collaboration in scale within the sector; collaboration with banks and other financial institutions, academics, government, foundations and corporations.

We also focused on leadership and were encouraged to look at what is simple, complicated and complex and to be mindful of where we expand our energy, time and resources.

In the end, we were a group of thought leaders who left our egos at the door, became one for a snapshot in time and together are fiercely committed to building capacity. Thinking Like a Movement individually, collectively and with our respective organizations in mind, we left the beautiful Sunshine Coast with a renewed belief that we are and will continue to be:

• changemakers,
• catalysts,
• leaders,
• service providers and – last but not least -
• innovators and social entrepreneurs committed to impacting our complex and ever-changing world and the systems in which we live and work.

For more information and resources on social entrepreneurship, social innovation and social finance, see the social innovation articles and resources on the MaRS website and at socialfinance.ca

Legislative innovations: New ways of business

About 18 months ago after winding up activities with a technology venture capital fund, I had that “AH-HA!” moment that so many of my friends and colleagues have described, but I had yet to experience. What was it? I met the SiG@MaRS team and a number of the passionate and talented social entrepreneurs they support. I learned about the challenges entrepreneurs in this field face and was intrigued by fact that while most social ventures require less capital than technology businesses and generally have a lower risk profile, capital is in very short supply. This is particularly true in Canada where most of us, including me before I was enlightened, assume that the government or charitable donors provide adequate funding for this sector.

In other markets like the US and UK, there is much better access to capital to support social entrepreneurs who are building “blended-value” organizations (those who deliver both financial and social or environmental impact returns). A number of organizations, including SiG@MaRS, have studied why this is so. One of the contributing factors is the lack of a legal organization structure that would make it easier for investors and funders to provide capital. It also doesn’t hurt that the UK has Sir Ronald Cohen, a very successful venture capitalist, as a leading advocate for the social finance sector and the US has Jed Emerson, a former social worker and current partner at Uhuru Capital in New York leading the charge on “blended value investment”.

My ah-hah moment was inspired by Cohen, Emerson and other leaders in this field. I, too, could try to leverage my venture experience to become an advocate for social entrepreneurs in Canada. And I could do that by working hands-on with the social entrepreneurs that SiG@MaRS supports but also trying to tackle larger projects that may help make it easier for entrepreneurs “doing good” for the benefit of Canadians.

Click to download the report

Specific to the legal structure challenge, we assembled a small, blended team including Allyson Hewitt, Director, SiG@MaRS, with deep experience in the charitable sector and two out-of-the-box thinking lawyers from Ogilvy Renault, Mark Convery and William Chung. Our goal was to explore what might be possible for social entrepreneurs. We reviewed and based our recommendations on work done by early pioneers in this field. I personally drew upon the many different and often complex financial transactions I’d help complete as a VC. I was often humbled by what I did not know about the intricacies of charitable and co-operative law and discouraged about how much more complex it was for a social entrepreneur to launch a start-up than in a traditional for-profit setting.

The result of our work is a whitepaper entitled “Social Entrepreneurship: Legislative innovations” which you can download from the MaRS website. We hope that this whitepaper becomes a useful tool for social entrepreneurs and their advisors looking at legal structure challenges and options. SiG@MaRS is using this paper as the basis for dialogue with representatives from the Ontario and Federal governments regarding change.

In the meantime, we continue to think about how to help social entrepreneurs get set-up under existing legal frameworks while maximizing their ability to raise capital. We’d love to hear about other solutions that are working in practice.

On the horizon: new capital structures

There have recently been significant inroads made in creating new sources of financing for non-profits and social ventures in Canada. Causeway hosted two discussions over the past month to flesh out the development of potential investment vehicles.

Below, I provide context for these conversations and offer resources for further understanding.  I’ll continue to use this blog to chronicle the main developments of these funds in an attempt to keep you and the mounting number of social financiers up-to-date.

The social and environmental landscape in Canada is large, vibrant and growing.  With 161,000 non-profit organizations employing two million people and combined revenues of upwards of $140 billion, the sector is larger than the automotive and manufacturing industries.  National climate change and sustainability agendas are spurring innovative business models while social challenges are being addressed by a growing movement of social entrepreneurs (be on the watch for an article by Tim Brodhead (PDF), “Not Letting a Crisis Go to Waste: An innovating agenda for Canada’s community sector”, in The Philanthropist; see also David Bornstein’s soon-to-be-launched website dowser.org).

Download the paper now

Unfortunately, current investing and funding models are ill equipped to cope with the tsunami of fiscal and demographic pressures building in Canada.

In response, a social finance approach encourages market forces to deliver social, environmental and economic dividends while building up social sector infrastructure.  MaRS’ 2009 Social Venture Finance white paper is an excellent source of background information.

In early December, Jed Emerson – the father of blended value investing – spoke at MaRS as part of a panel of mainstream finance, foundation and non-profit think-tank leaders.  The challenge was simple: how can Canada, in the wake of clear advances in the US and UK, develop social purpose investment vehicles?  A podcast and a complete summary report of the event are available.  Stemming from the discussion were five potential avenues for fund exploration:

1. Loan and Investment Fund
2. Community Investment Vehicle
3. Fund of Funds Product
4. Social Venture Fund
5. Program Related Investment Fund

Drawn from the Jed Emerson event and the follow-up discussion held recently in January, here is a brief background of the proposed funds:

Loan and Investment Fund

Leadership – Nora Sobolov

• Model after the Nonprofit Finance Fund in the US, the fund will seek to provide working capital and bridge loans to non-profit and charitable organizations (download the PDF)
• Using private sector (banks) and philanthropic capital, the fund would act as an intermediary, providing access to capital for organizations that traditionally have had a difficult time securing financing loans and financing
• The fund will also work with nonprofits to build financial capacity

Next Steps:

• Finalize a business plan proposal
• Solidify financing to develop a detailed business and operational plan
• Find investors for the fund
• Recruit experienced experts from the financial sector or potential investors to act as part of an advisory panel

Community Investment Vehicle

Leadership – Social Investment Organization (SIO) (Eugene Ellmen)

• A product to channel investment dollars from individuals and institutional investors
• Invested nationally in revenue generating social enterprise owned and operated by nonprofits
• The Social Investment Organization, the trade association for the socially responsible investment industry is looking to develop the product within the next 18 months
• SIO is looking for experienced consultant(s) to conduct two projects:
  1) determine the size of the target pool of social enterprise projects, and
  2) develop a vehicle to invest in an underlying bundle of social enterprise projects.

Next Steps:

• SIO, with the oversight on an advisory panel is outsourcing the development of this fund to (an) experienced consultant(s). A Request for Proposal(.doc) has been sent out.

Fund of Fund Product

Leadership – Mercer Consulting (Jane Ambachtsheer)

• A fund that would invest in an underlying pool of socially responsible funds
• The Fund of Funds would allow investors to get access to socially responsible investment opportunities in a cost efficient manner
• Similar to the proposed Community Investment Vehicle stewarded by SIO but with broader investment criteria (multi-asset class, global diversification)
• Large and small capital pools can manage risk by diversifying across a spectrum of investments while sharing risk with other investors
• Potential investments could include equities, fixed income, real estate, private equity, infrastructure, microfinance, social enterprises

Next Steps:

• Develop a proposal, business plan and seek out prospective investors

Social Venture Fund

Leadership – Kerri Golden (MaRS) and Sarah Goel (Edgestone Capital)

• Set-up to encourage social innovation and fund social entrepreneurs
• Primarily for early stage social ventures with strong potential to scale
• Try and raise enough funding for a demonstration vehicle that can be leveraged to larger size with government participation

Next Steps:  Assess potential funding models and develop a business plan for the fund

Program Related Investment Fund

Leadership – Community Foundations of Canada (Betsy Martin), Philanthropic Foundations of Canada (Hilary Pearson), The JW McConnell Family Foundation (Tim Brodhead)

• The idea of a challenge or campaign has been proposed to raise capital within the foundation community for a notional fund that could catalyze creation of new financial products serving the mission-based investing market (although at first such a capital raise would focus on private and community foundations, others, such as corporate foundations and even government, could be drawn in as providers of first-loss capital)
• With 96.5% of foundation assets typically not aligned to mission (obligatory disbursements are only 3.5% though many foundations exceed that), foundations have been called-out to make a greater impact with a greater portion of their capital
• There have been suggestions to emulate the US campaigns for “More for Mission”, encouraging Program Related Investments (PRIs) and Mission Related Investments (MRI). One role model has been the JW McConnell Family Foundation whose board recently passed policy to dedicated at least 5% of capital to mission related investing
• A Responsible Investing initiative by the Community Foundations of Canada (CFC) has been piloted to encourage mission-related investing practices
• Just recently, CFC launched a Responsible Investing resource website and a research paper that looks at the availability of resources and training on responsible investing targeted at Canadian foundations and endowments

Next Steps:

• Confirm the leadership for a notional pool capital raising campaign
• Solicit a commitment from a broad number of foundations
• Publicize the resulting pool of capital supporting the emerging social fund marketplace

One question that continues to come up is around the landscape in Canada to support social funds.  The main concerns tend to cluster around appetite for risk and the potential size of deal flow.  Research from coast to coast provides examples of social finance at work.

Here are a few resources that you may find useful:

• In 2004, Coro Strandberg offered introductory research on Community Investment in Canada – a scan of the environment influencing socially responsible investing practices.
• More recently, Causeway commissioned a research paper, “Building the Case for Social Finance in Canada” to provide an overview of the current Canadian landscape and research on investment tools and opportunities.
• In Peter Elson’s recent research paper, “Building Capital, Building Community”, he and his co-authors explore the contrast between Ontario’s enterprising nonprofit sector and Quebec’s social economy while providing a lay of the land for current and historic deal flow.
• Tessa Hebb and Karim Harji look at the demand and supply of capital, the role of intermediaries, barriers and opportunities in the area of social finance in their research paper, “The Quest for Blended Value Returns: Investor Perspectives on Social Finance in Canada”

We are at a very interesting junction within the social finance realm nationally; these new investment vehicles have the potential to greatly increase the amount of private investment capital flowing to social purposes.  Stay tuned for more information about these initiatives or contact me if you are interested in learning more or contributing in some way.

Multimedia resources

• Jed Emerson “Lived It” lecture – Includes blog links, videos, presentation files
• Blog: “Blended Value Proposition: Canada are you ready?” by Allyson Hewitt, Director, SiG@MaRS

Impact Investing: Presentations

Impact Investing: Q&A with Tim Draimin

Impact Investing: Audience Q&A

The Toronto Star publication emphasizes that more and more social enterprises (defined as “a not for profit organizations with a primary social or environmental mission and an intent to generate revenue in the market economy by providing a good or services”) are being compared on the same standard as traditional for profit businesses. In this study, operations and HR practices were compared.

What was the selection criteria used? Mediacorp editors graded each of the applicants on eight key areas:

1. Physical workplace
2. Work atmosphere and social
3. Health, financial and family benefits
4. Vacation and time off
5. Employee communications
6. Performance management
7. Training and skills development
8. Community involvement

Based on these categories, the YMCA of Greater Toronto and the other non-profit organizations chosen all scored high enough to make the cut.

For example, take the YMCA of Greater Toronto, who made this year’s list.  They’re a non-profit/charity focused on community support and development through three core programs: YMCA health, fitness and recreation, YMCA child and family programs and camps and YMCA employment, skills, youth and newcomer programs. They generates income from membership fees for access to their services. The goal of the YMCA is to provide every individual in the community with opportunities for personal growth, community involvement and leadership.

Social enterprises are beginning to prove that, not only are they strong and important contributors to Canada’s social and economic fabric, they are also rewarding organizations to work for and learn from.

In another Toronto Star win for social enterprises, MaRS client Eva’s Phoenix was profiled in the article, “Where Purpose Trumps Profit.” Eva’s Phoenix is a non-profit youth shelter which runs social enterprise in the form of a print shop.  “The downtown shelter set up the small-job print shop 10 years ago as a way to not only raise money, but also to fulfill its mandate to help troubled youth get off the streets and lead productive lives by training them to get good jobs.”  Eva’s Phoenix is an example of the emerging “hybrid vehicle” that has resulted as a response to the growing interest around social entrepreneurship. Doing good and making money are not negatively correlated. “At the Phoenix Print Shop, the need to raise money for the shelter never comes before the imperative to train the shelter’s youths to move on to another job,” they work hand in hand.

Social entrepreneurship and social enterprise is on the rise. This new hybrid space has begun to prove itself as a sector that can contend with the others. This has sparked significant interest in Canada. Compared to other G8 countries, Canada is lacking at the federal level. Consider particularly the UK which has appointed a minister for the third sector.  In the US, Obama has launched an office of social innovation. Our federal government has yet to see the importance of this hybrid space. Yet organizations like MaRS continue to act as a catalyst for social enterprises in Canada. Social entrepreneurship is an extension of our advisory services provided to traditional entrepreneurs. In terms of operations , HR, business plan development, marketing and strategy there is no distinction to between the two

Another example of how social entrepreneurship is being held to the same standards as any other company… and on the rise.

Robert F. Kennedy Jr @ MaRS

Listening to Robert F. Kennedy Jr. is a little like watching a talented chef in action.

His encyclopedic knowledge of his country’s myriad environmental ills, its rapacious corporate culture and legendary political pork-barreling, combined with his clear love of the American landscape itself, cooks up an inspiring feast for the cliche-weary listener. No wooden delivery here (in spite of a nagging vocal hoarseness for which he apologized).

Appearing at MaRS as one of the keynotes in a dynamite lineup for Advertising Week 2010, Kennedy unpacked a basket of ingredients that have long mired his homeland in the environmental soup. Not the least of which is the intricate web of direct and indirect US subsidies that prop up industry’s continuing addiction to cheap coal. Factor in the real costs of coal production – denuded landscapes, poisonous health effects and dwindling benefits for local economies – and your cheap fast-food just got a whole lot pricier.

It may be a familiar enviro-storyline but Kennedy’s speech was not a hand-wringing exercise.

Named one of Time.com’s “Heroes for the Planet” for his success in helping the Riverkeeper organization restore New York’s Hudson River, Kennedy’s cri de coeur has long been that good environmental policy is good economic policy.

From vast solar energy farms in the searing California desert to the “Saudi Arabia of Wind” – go, North Dakota! – the US and Canada unquestionably have the natural prowess to dominate the shift to green energy production. We also have the economic horsepower, he argues: the same capital cost to retool energy production from dirty coal to clean-landing solar photons or night-time wind power can handily generate enough free energy that will, in turn, drive an economic resurgence.

That’s certainly the thinking here in Ontario as well, where the new Green Energy and Green Economy Act lays the groundwork for what many believe will be the largest infrastructure renewal in history. (Watch marsdd.com in the weeks ahead for interviews with some of the key European and North American alternative energy players captured at last week’s (soldout) Green Energy Act Finance Forum.)

The time is clearly right for  investment in Ontario’s growing green economy. As Kennedy reminded us so passionately: Nature is the ultimate infrastructure project.

Plans for the orphanage for Haitian children with HIV/AIDS

Natural disasters like the earthquake in Haiti and the tsunami in South Asia always come as a huge shock and are always tragic. Too many people die, are orphaned, are made homeless. For a week or two, the countries most affected by the force of Mother Nature are thrown into the international spotlight. Millions around the world find spare dollars to send for reconstruction, food, clothing and medicine. For many of us, it is all we can think to do.

The unfortunate reality for Haiti, however, is that it is already one of the world’s poorest countries. It could never have been ready for this earthquake and the effects are exponentially worse due to the poor living conditions. The Haitians need some systemic change after years of political unrest, corruption and foreign intervention. The solution? Social innovation.

Back in 2005, a colleague of mine began planning to build an orphanage in Haiti, specifically for children with HIV and AIDS. He attended the changemaker conference, Web of Change on British Columbia’s Cortes Island in 2006, to seek support for his plan. In late 2008 We can build an orphanage was launched. The concept relies on donations towards the building supplies for the orphanage plus medication and food. The donor can decide what materials they would like to “buy” and in what quantities. On the website you can watch videos describing the multiple hurdles these children have to clear in order to lead a “normal” life. For Luke Montgomery and changemakers like him, he didn’t begin this project to become famous or make himself feel better. He did it because there was a very real need. Last week the orphanage was destroyed in the quake, but fortunately all the children survived. Rebuilding will start as soon as possible.

Luke exemplifies the qualities of a growing number of internationally recognized social entrepreneurs. One organization that has been actively recruiting and supporting social entrepreneurs for 30 years is Ashoka. On January 14, here at MaRS, eight changemakers were inducted as Canadian Ashoka fellows and three were made Senior Fellows. The projects and fields they work in are varied and during all of their presentations I found myself thinking, “Wow… that’s a great idea. Very cool.” Whether it’s Tonya Surman’s Centre for Social Innovation here in Toronto, which provides physical collaborative workspace to changemakers,  Ilona Dougherty’s Apathy is Boring project which aims to engage young people in the political process, or Johann Olav Koss’s Right to Play project which has given over 100 million children the opportunity to play in war torn and impoverished countries around the world. All of the projects address a real need.

Ashoka’s tag line claims everyone is a changemaker. But what does it take? Social entrepreneurship is risky. While the need for social entrepreneurs is great, the road is rough. Added to that, sometimes entrepreneurs are working in places that need far more radical change. Social innovation looks to find solutions to systemic social and ecological problems – like those found in Haiti. As part of SiG’s exploratory work into what ingredients are necessary to realize social innovation, we have unleashed a list of 10 components that are up for debate. I have included the list at the bottom of this post and I would love for you to add to or challenge any of them.

While Canada enjoys a level of freedom and opportunity that Haiti doesn’t have, it’s important to remember that we could do things better. That is the spirit of innovation.

This post is a shout-out to the social entrepreneurs of the world that see innovative opportunities to start projects in communities and countries that are often overlooked or ignored. It’s also congrats to the newly-inducted Ashoka fellows and a call to action for the rest of us. You might be thinking, well sure, but how?

On January 27, 2010, Adam Kahane is delivering SiG@Waterloo’s Lecture on Social Innovation. This lecture highlights world-class thinkers with new ideas on how to achieve significant, durable social change for our most pressing problems. Adam is a leading organizer, designer and facilitator of processes through which business, government and civil society leaders can work together to address their toughest challenges. He has worked in more than fifty countries, in every part of the world, with executives and politicians, generals and guerillas, civil servants and trade unionists, community activists and United Nations officials, clergy and artists. Visit SiG@Waterloo’s website to purchase tickets or watch the live streaming presentation at 7pm on January 27.

Of course if you already have an idea and need advice getting it started, get in touch with us at SiG@MaRS. Here’s SiG’s top 10 list of ingredients for social innovation. We invite your feedback.

1. Be creative
2. Leverage market forces
3. Leverage new technologies like social media and cloud platforms
4. Drive social innovations to scale to achieve impact
5. Nurture multi-sector partnerships reaching beyond and across silos
6. Adopt open-source practices, sharing ideas, learning from successes and failures
7. Employ systems-thinking, unlocking the secrets of transformative change
8. Explore how public policy can ensure an enabling environment
9. Build up the social finance marketplace supporting sustainable business models
10. Support social entrepreneurship as a critical vector for social innovation

Buzzwords in social innovation

Like yours, my inbox is full of really great information on things of vital importance to my field: social innovation.  Most of them receive a quick scan but I always try to find the time to read Philanthropy 2173 by Lucy Bernholz.  I find her particularly tapped-in and insightful.

And as we enter not just a new year but a new decade, Lucy is offering her insight on this year’s buzzwords.  Every sector has them; some more than others. I find them an interesting snapshot: terms that were once completely new to us are now thrown about as if everyone should know exactly what we’re talking about.  Check out Lucy’s blog for more details but the list is below with my thoughts on their relevance for SiG@MaRS in 2009.

Impact Investing – This term really took off for us as a result of SoCap 09 and the presentation by Katherine Fulton of Monitor.  It just seemed to resonate and it was certainly reinforced at the recent presentation by Jed Emerson and others at MaRS last month.   Impact investing is a major focus for us in our work in the area of social finance and a concept we hope will soon come into the mainstream and be used by investors interested in seeing at least a double bottom line return on their investments.

B Corporation – Lipa Roth of the Ministry of Citizenship and Immigration suggested we look into this and Mark Bachman from Better The World also approached us to see if there was any interest in supporting the concept of bringing B Corporations to Canada.  Working with Heenan Blaikie, we conducted due diligence to help Better The World become Canada’s first certified B Corporation.  We look forward to working with Green Enterprise Toronto and others to Canadianize these standards and promote B Corps in Canada to social entrepreneurs and to prospective investors alike.

Mergers – We have not seen lots of these but instead an emergence of networks and “networks of networks”.  What mergers have you seen?

Taxonomy – As someone who worked with library scientists at Community Information Toronto I have a great deal of respect for the value of taxonomies, something that seems out of fashion in the era of “just google it”.  If there is a term I would add to this list it would be metrics. We see the demand for metrics everywhere and a taxomony is one step in moving towards the use of standards that are necessary for the purpose of inevitable comparisons.

Maps – There certainly was a lot happening online in regards to mapping. Among our social entrepreneurs, however, we heard a lot about GPS technology for the purpose of social good.

Charity Challenge – Again, we saw these competitions everywhere.  We even hosted the Social Enterprise Angels event, Social Investing in Action, as part of the Canadian Conference on Social Enterprise with the Social Enterprise Council of Canada and Social Venture Partners Toronto.  I still think Canada needs a competition with a significant prize that would bring out our best.

Leverage – Always a good idea; not just leveraging financing but leveraging ideas to be customized to meet your client needs. For example, CIBC Presents Entrepreneurship 101 has been leveraged to meet the needs of social entrepreneurs instead of creating a stand-alone resource.

Pipeline – It is important to create capacity for the next big ideas to emerge.  We are privileged to see lots of developing social entrepreneurs and to help promote their ideas and turn them into reality.

Sidecar Fund – Not such a new a concept for many in the financial industry but the concept of riding along an existing fund makes a lot of sense, both for economies of scale and for access to expertise. This concept was certainly emphasized by Paul Cheng from Venturesome who we were pleased to also host along with the Ontario Trillium Foundation and Social Enterprise Council of Canada in November 2009.

Move the needle – Whatever you call advancing movement in our sector — it’s all good.