The Changing Landscape of Social Finance in Canada
The growth of social enterprise and social innovation has been significant in Canada over the last number of years. With over 165,000 non-profits in Canada and an increasing number of them planning some form of commercial activity to satisfy the dual purpose of social value and financial self-sufficiency. With social responsible investors looking for sound sustainable businesses to invest in, corporations looking to transform their culture, and the prevalence of young, talented professionals with a passion for resolving the worlds most pressing problems, its safe to assume that talk about social entrepreneurship is not going to peter out. The potential impact that the growth of the new social economy represents for market transformation, environmental sustainability and social change has just started to gain the attention it deserves. All of these trends lead us to conclude that the rise of social entrepreneurship is not a passing fad, but rather a movement gaining momentum across the country and beyond.
Is Canada Lagging Behind?
It would appear that until recently funding and financial backing for this important form of entrepreneurship has not quite kept pace. Many of the supports and financial tools for the cultivation of social enterprise have been absent for many years, making it exceptionally challenging for these engines of socio-economic change to thrive. Research indicates that the development of an appropriate social finance infrastructure to support the non-profit sector has been lagging behind in Canada (Goldenberg, Kamoji, Orton & Williamson, 2009). However, as the social enterprise movement grows, new and exciting forms of social innovation are beginning to emerge and fortunately with this wave of innovation comes the arrival of new partnerships, sources of capital and funding arrangements. It would appear that the concept of creating businesses and initiatives to address social issues is gaining support at all levels in Canada (Avery, 2010). With Human Resources Minister Diane Finley recently rallying for the Federal Government to support social finance in Canada (Curry, 2013) it is becoming apparent that government is getting on side. The Government of Ontario has also just announced a unique partnership between the Ministry of Economic Development Trade and Employment, Centre for Social Innovation (CSI), TD Bank, Microsoft Canada, Alterna Savings, KPMG and Social Capital Partners. A breakthrough in social finance for the province, this group will offer microloans for social enterprises that will be administered through the CSI community.
Social Finance Propels
As Canada’s public institutions and private lenders, recognize the undeniable and unique opportunity for investing in social enterprise we are seeing the menu of options for social entrepreneurs increasing. Currently, financing options for social entrepreneurs include: technical assistance grants, seed money, micro-loans, community bonds, crowd funding, venture capital and angel investment.
Organizations that are typically more concerned with corporate finance are expressing significant interest in more sustainable, socially responsible forms of business. While the more traditional funding sources of charitable donations and grants from foundations and trusts remain staple contributors to social enterprises in Canada, major financial institutions, such as, Royal Bank of Canada and Toronto Dominion, are coming forward with organized funding programs, eager to be active participants in the social enterprise movement. In addition to these exciting developments comes the emergence of innovative financing tools, like community bonds, and new funding vehicles, like online crowd funding platforms. Both seek to adopt new approaches and move away from the more traditional funding mechanisms. The hope is that over time impact investors will develop risk metrics, modify traditional lending models, and provide financial products suited to each stage of social enterprise development. These new forms of social funding combined with the more traditional finance mechanisms are important components of an emerging social finance infrastructure which will facilitate the growth of a sustainable, vibrant and innovative social enterprise sector in Canada.
In response to the growth of the social enterprise sector and the emergence of new social finance sources, Eco-Ethonomics Inc. has created a resource of the Top 15 Social Finance opportunities in Ontario today.
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For individuals aware of other opportunities for funding social enterprise that we have missed, please send us an email at: firstname.lastname@example.org.