Wednesday, March 24, 2010

Social Capital Financing

Connecting the dots….that’s what needs to happen to get social finance rolling in Canada. Today’s Lunchbox Speakers Series, sponsored by the Social Economy Centre at U of T, featured Karim Harji of Social Capital Partners and, and Anne Jamieson of the Toronto Enterprise Fund, a project of the United Way.

Although in Mr. Harji’s favoured economic lingo, he approached the problem from the supply side and Ms. Jamieson from the demand side, both had a similar take on where we are now and how to move social finance forward.

Social finance was defined by Mr. Harji as the deliberate and intentional application of tools, instruments and strategies to enable capital to achieve a blended value return. Blended Value is a concept articulated by Jed Emerson, similar to the triple bottom line. The Blended Value Proposition states that all organizations create value that consists of economic, social and environmental value components, and that investors simultaneously generate all three forms of value through providing capital to organizations.

SRI is part of the social finance spectrum and we are seeing increased activity in a variety of related areas, including our third pillar, community investment as well as social enterprise, impact investing etc.

According to Mr. Harji and Ms. Jamieson, three main areas need to be developed in order for social finance to move forward. These are:
· The legal/legislative framework. Canada does not mirror the range of organizations that exist in the UK, or even the US. Many other jurisdictions allow hybrid entities, which facilitates the flow of capital to social ventures. Work is being done in this area, check out the white paper Social Entrepreneurship: Legislative Innovations sponsored by MaRS.
· Measurement tools and Social Finance metrics. It’s relatively easy to measure the business outcomes of social enterprises, but how do we measure the social outcomes? And how do we balance the social outcomes and the business outcomes?
· Educating investors on how to look at the not for profit sector. Probably the toughest task. The SRI community has spent years, nay decades, demonstrating how environmental, social and governance factors impact financial returns, and we know it’s a tough slog. But we never give up.

There’s a lot of activity in the social finance area in Canada, but Mr. Harji is concerned by the amount of ‘uncoordinated innovation’. The SRI community is involved in helping to join the dots, most recently through the SIO’s project, ‘Impact Investing: a feasibility study for social enterprise financing’ with partner Causeway and funding from the Trillium Foundation. More partnerships like this will allow us to learn from each other and leverage our resources to encourage the advancement of social finance.

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