Mobilizing Private Capital for Public Good: Priorities for Canada was released today. The report is available in English and French. Read the executive summary and download the report here.
Last spring, British Prime Minister David Cameron announced the international Social Impact Investment Taskforce. A group of 24 Canadian experts from the private, non-profit and academic sectors came together to support this effort. Their report, Mobilizing Private Capital for Public Good: Priorities for Canada, was released today.
Impact investors place capital into enterprises and projects that aim to achieve a social impact, alongside a financial return—such as affordable housing projects, businesses that employ and train at-risk youth, and clean energy companies. Going further than many forms of socially responsible investment, which seek to avoid harm by using a minimum standards approach, impact investments deliberately target and measure social impact.
Social challenges—from youth unemployment to chronic disease—demand new approaches, cross-sector partnerships, and sources of capital, or they will increasingly represent a drag on the wellbeing of Canadian communities and government budgets.
Impact investment focuses attention on the investor, but the real win is at the community and individual level, if additional capital can be redirected towards solving the tough challenges we face, and if it can help those on the front-line to improve social, environmental and economic outcomes.
The good news is that impact investment in Canada is on the rise. Unfortunately, it is being stymied by an outdated legislative framework, transaction costs, and perceptions of risk.
With notable exceptions, there has been a prevailing sense that the charitable sector exists only to help those in need, that philanthropy is confined to the act of giving, that the primary job of governments is to provide services based on demand, and that investors should remain narrowly focused on profit. Without questioning the ongoing value of these roles, impact investment introduces a new set of expectations. It allows for a blending of social and financial motivations. And by emphasizing social impact, it increases the focus on addressing the root causes of social challenges, and on using measurement and data to determine what works.
Impact investment is vital to unlock innovation in the social sector. There are growing numbers of entrepreneurs who are mixing a social impact objective with a profit motive, and growing numbers of enterprising non-profits and charities. These innovators are looking for capital to launch their ideas, become financially sustainable, or grow to scale.
To realize the full potential of the Canadian impact investment market, government leadership is needed. Canada’s report recommends action in four key areas:
It’s clear that innovation is needed to solve tough social problems. As in any sector, this requires capital. Governments are well placed to enable this activity, and to seize the potential of Canada’s impact investment market. We urgently need their engagement, to open the path for non-profits, social entrepreneurs and impact investors to achieve game-changing results for Canadian communities.
This report was informed by a group of 24 Canadian experts, from the private, non-profit and academic sectors (the Canadian “National Advisory Board”) and builds on the 2010 report of the Canadian Task Force on Social Finance. The reports of the Social Impact Investment Taskforce, other National Advisory Boards, and Taskforce working groups on impact measurement, asset allocation, mission alignment, and international development are available here.
Mobilizing Private Capital for Public Good: Priorities for Canada is available for download here.
The G8 Social Impact Investment Taskforce has an explainer video that goes through the basics of impact investing.