MaRS

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”.

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.

In October, The Toronto Star published Mediacorp’s  Honour Roll of GTA’s Top 90 Employers for 2010. While there were some encore appearances from companies such as KPMG LLB, Bayer Inc and Ontario Power Generation,  what was particularly interesting was the number of non-profit organizations that made the list. Particularly notable was the increase in this number from 2008 to 2009. Of the 90 companies who made the cut, 22% are non-profit organizations with a few operating social enterprises.

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.

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).

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.