One short year ago, the Task Force on Social Finance released its report, Mobilizing Private Capital for Public Good. It was time to more formally embrace the growing impact investment movement as a viable and necessary economic activity for Canada. Social finance, also known as impact investing or blended value investing, is defined as proactively investing in businesses, organizations or funds that generate both a social or environmental AND financial return. The Task Force on Social Finance was conceived by SiG (Social Innovation Generation), a national partnership of organizations focused on understanding, catalyzing and implementing transformative social innovation. Over the past three years, the SiG team – having identified social finance as a critical and timely lever to accelerate innovation – has worked with partners nationally and internationally to conduct the background research for the Task Force and monitor developments at home and abroad. The goal of the Task Force was to map and highlight examples of social finance already working internationally and across the country, identify opportunities for scaling effective models and share those case studies more broadly. This research was then used to develop a suite of seven evidence-based, catalytic recommendations for mobilizing new sources of capital, creating a supportive tax and regulatory environment, and building a pipeline of investment-ready social enterprises. Over time, action on these recommendations could help build a truly robust impact investing marketplace in Canada. Most of all, the Task Force members hoped to raise awareness of the rapidly emerging field of social finance and stimulate a national conversation about the opportunity it represents for Canada. Today, the economic, social and environmental imperatives to continue this exploration are as compelling as ever. These challenging times demand new thinking from all of us. Canada will need to capitalize on the talent and creativity of all its citizens to prosper in the years ahead. Broadly defined, social enterprises are a rapidly growing and critically important part of our innovation economy, developing new approaches to tackling complex 21st century problems. They increasingly rely on private investor support to expand their programs and scale their impact. With continuing global instability, there is growing interest in investment approaches that look beyond pure financial returns and also take environmental and social impacts into consideration. These approaches require new partnerships between governments, businesses and communities. Over the past year, social finance has found its way into the government lexicon, positioned in the Canadian federal budget announcement as a strategic leverage point for supporting government / community partnerships, developing innovative ways to address local challenges, and creating economic and social prosperity. Provincial initiatives are similarly forging new collaborations and encouraging joint initiatives.
There has been over $50 million of new MRI capital committed in 2011
Foundations have stepped up to do their part in line with the first recommendation from the Task Force report, which called for Canada’s public and private foundations to invest at least 10% of their capital in mission-related investments (MRI) by 2020. There has been over $50 million of new MRI capital committed in 2011, and we send a hat-tip to the Edmonton Community Foundation for their 10% commitment to MRI and individual allocation of $27.5 million this year. Pioneering groups of non-profit leaders are harnessing community capital through unique investment tools and community bond products, driving program growth and organizational capacity. The financial and business sectors remain under pressure and are understandably preoccupied by international challenges. Clearly, deeper participation from private sector leaders is critical to developing a healthy social finance marketplace, and we welcome recent efforts to evaluate these opportunities. While big policy shifts take time, we have to be both patient and impatient–always a challenging balance to strike. However, the intense interest and deep level of engagement across major sector axes, from the foundation sector and governments to the community sector, is encouraging. In a recent JP Morgan report entitled Counter(Imp)acting Austerity, the authors write: “Canada is now following in Britain’s footsteps at a fast pace, with the Canadian Task Force having recommended in December 2010 that the federal government establish the Canada Impact Investment Fund and that provincial governments should follow suit. If the Canadian experience follows that of the UK after the Social Investment Task Force, then we may see significant sponsorship of the impact investment market evolve over the coming years.” Tonight we will reflect on recent developments in social finance relevant to the recommendations of the Task Force. We will also hear from Antony Bugg-Levine, recognized thought leader and CEO of the US-based Nonprofit Finance Fund, about opportunities to propel impact investing to greater heights. Tomorrow, we get our hands dirty at the Social Finance Forum: Investing in Good Deals Conference.
The new MaRS Centre for Impact Investing is presenting the Forum – we are proud to officially launch the Centre today with founding support from the J.W. McConnell Family Foundation, the Rockefeller Foundation and TMX Group Inc. The Centre will directly pursue the important task of actually mobilizing capital in new products and supporting others doing so, which is essential to rallying the commitment of more (and new) investors in this marketplace. We look forward to continuing our collaboration with the international impact investment community, sharing what we learn and exploring opportunities to stimulate both conversation and action in the coming year. We firmly believe that private capital has an important role to play in advancing public good. The collapse of the world’s financial system has highlighted what happens when these levers are misaligned. Impact investing is not simple. It requires a new way of thinking and of doing business – with the public and private sector working together on building true shared value for the long haul. This is the essence of sustainable innovation, and both Canada and the world need more of it. I would like to thank the Task Force members, Tim Draimin and the SiG team, as well as the many partners across Canada who have worked so hard to advance social finance over the past year. We look forward to the next installment of this adventure in the year ahead.