Many Canadians face persistent and complex social challenges that make it difficult for them to succeed and reach their full potential.
In the 2018 Fall Economic Statement, the Government proposed to make available up to $755 million on a cash basis over 10 years to establish a Social Finance Fund.
The Fund will help charitable, non-profit and other social purpose organizations access financing for projects that will have a positive social impact, such as reducing poverty, expanding employment opportunities for persons with disabilities, or building more affordable housing.
How the Social Finance Fund Will Work:
- Funding will be managed through professional investment managers with expertise in social impact reporting and a proven ability to promote inclusive growth and diversity in the social finance market, to be selected through a competitive selection process in the fall of 2019.
- The fund manager(s) will invest in existing or emerging social finance intermediary organizations that have leveraged private or philanthropic capital for co-investment.
- The fund manager(s) will be required to leverage a minimum of two dollars of non-government capital for every dollar of federal investment, with the exception of investments for Indigenous-led or Indigenous-owned funds.
Under the Social Finance Fund:
- A minimum of $100 million will be allocated towards projects that support greater gender equality—leveraging existing existing philanthropic and private sector funds towards this purpose in order to help them reduce the social and economic barriers faced by diverse groups of Canadians of all genders.
- A $50 million investment will be made in the newly proposed Indigenous Growth Fund.
As announced in the 2018 Fall Economic Statement, the Government is also proposing a related investment of $50 million over two years, starting in 2019–20, to improve the ability of social purpose organizations to successfully participate in the social finance market. This funding will support more robust business planning, provide technical assistance and enable social purpose organizations to develop impact measurement tools to monitor progress achieved.
There are several existing funds already active in Canada’s social finance market. Both newly created and existing funds will be able to access the capital available through the Social Finance Fund, including funds such as:
- VERGE Capital (Ontario) makes loans to social enterprises in Southwestern Ontario that build affordable housing, provide access to employment and offer training for persons with disabilities, and provide affordable and accessible education materials. Since VERGE was launched in 2014, it has leveraged an additional $5 from investors for every dollar of provincial support.
- The Chantier de l’économie sociale Trust (Quebec) provides patient capital financing to support start-up, expansion and real estate activities of co-operatives and non-profit businesses. The Trust has provided loans to local communities to help restore essential services, and supported programs to help at-risk youth, including Indigenous youth, acquire skills through integrated learning opportunities.
- The Saint John Community Loan Fund (New Brunswick) works towards helping individuals and organizations create income and build assets and self-reliance using finance, training and support. For example, the Fund provided: a loan to leverage a mortgage to develop affordable housing units; support for establishing a literacy organization; and capital for an innovation hub to help launch and develop new social enterprises.
- The Social Enterprise Fund (Alberta) provides access to loan capital for social entrepreneurs to address challenges in the environment, social issues, local food security, culture and other public benefit missions. For example, the Fund has provided support to mental health organizations to help provide accessible housing for clients, employment opportunities for persons with disabilities, and therapeutic programs for adults and children with physical and mental intellectual disabilities.
- Renewal Funds (British Columbia) provides early-stage growth capital to for-profit social enterprises with the potential to create social or environmental change in industries such as clean technology and sustainable agriculture.
- Jubilee Fund (Manitoba) is managed by the Assiniboine Credit Union, and provides loan guarantees and bridge financing to non-profit community projects focused on reducing poverty and financial exclusion.
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