Microfinance has a respected history in the field of international development. Often described as a hand up rather than a hand out, its aim is to reach the un-bankable – providing access to financial services for populations traditionally marginalized by the economic mainstream.
October’s 2010 Toronto Microfinance Conference & Gala brought together several hundred microfinance practitioners, students, advocates and micro-newbies. The program featured speakers who live and breathe the “micro way” as well as individuals representing organizations who do not deliver microfinance programming but whose work falls into the very dynamic and growing space of social finance.
In only its second year, the conference’s co-hosts spanned the social finance spectrum; from micro-credit lending organizations that work in the global South like Impact First International, to local community fund organizations such as Access Community Capital Fund and corporations working in innovative ways like Home Ownership Alternatives.
According to socialfinance.ca “social finance is an approach to managing money that delivers a social and/or environmental dividend and an economic return.” Microfinance is intrinsically social finance. An innovative model in the 1970’s, microfinance is today a tangible and successful model of social finance.
The reason microfinance programs exist is so that populations traditionally considered un-bankable – before innovative people like Muhammad Yunus proved otherwise – are able to access credit to expand a small business, to apply for insurance to protect their family, or to maintain a savings account for the future. The social and economic purposes are intertwined.
Here in our own backyard similar approaches have been hatched. Community fund organizations such as Access Community Capital Fund aim to provide marginalized populations access to capital in an effort to foster community development through entrepreneurship. Previously a MaRS employee and now the Development Manager at Access, Alex Kjorvn does a great job in her blog, Microfinance in the Metropolitan, of highlighting the challenges faced locally when attempting to “add credit and stir.” The micro way has made great strides in community development in the South and has a promising future here in the North.
Microfinance is one example of social finance that is helpful in articulating the need, success and potential, for a hospitable social finance space in Canada. For example, as an established conduit of double-bottom line income flow, microfinance is a potential mode through which mainstream financial players can begin to explore their role in this field. In communities where microfinance has traditionally reigned an increasing number of mainstream financial institutions — like Scotiabank and Mastercard — are working alongside or in partnership with existing local micro-organizations to begin addressing some of the financial needs of marginalized communities.
From the topic of microfinance, the conference attendees made the leap to exploring the wider social finance landscape – a place that includes approaches to development such as Asset Based Community Development (ABCD) in the South and ethical asset management here at home. The conference highlighted that social finance is bigger than the micro way and that Canada’s futurescape includes the innovative approaches that social finance promises.
The social finance marketplace is fast developing here in Canada and there is a concerted effort being made to fast track its success. Led by MaRS CEO, Ilse Treurnicht, the Canadian Task Force on Social Finance is currently generating a set of recommendations to government, the private and social sectors that will serve as a guide to catalyze the marketplace and spur investment. You can find out more about the Task Force here.