This column is an opinion of Victor Beausoleil, Marie J. Bouchard and Carole Anne Hilton. Beausoleil is the founder and CEO of Social Economy Through Social Inclusion (SETSI) and President of the Canadian Community Economic Development Network (CCEDNet Network). Bouchard is a professor at the School of Management Sciences at the University of Quebec in Montreal and a member of the Center for Research on Social Innovations (CRISES). Hilton is the founder and CEO of the Institute of Indigenomics and was a member of the Federal Advisory Council on Economic Growth. For more information on the CBC Opinion section, please see the FAQ.
The Global Risks Report, released by the World Economic Forum earlier this year, cites the main challenges we face today – a daunting list. The environmental damage caused by climate change and our inability to act on it is the main danger, while the COVID-19 pandemic that has killed more than two million people worldwide has highlighted the risk of Infectious diseases. The pandemic has also increased societal risks such as poverty and threatens economies.
We cannot respond to these global problems with complacency, simply throwing money at them, or with top-down or siled solutions. We need bold, sustainable and holistic community-based approaches with far-reaching results. And we need it now.
We can harness social innovation and social finance as a solution to these very real global risks.
Social innovation and social finance offer an economic ‘triple game’ – mobilizing investment and creating jobs, while tackling social inequalities and environmental degradation.
Social innovation simply means working together to develop original solutions to collective problems in support of social progress. It requires collaboration between community leaders, nonprofits, charities, co-ops, government and the private sector. Social Innovation is that cafe down the street that employs at-risk youth to give them a better start in life, or a small town senior housing co-op that allows them to age in place.
Social finance is a tool that enables social innovation. It is an investment approach that delivers measurable social and environmental benefits, mobilizing both private and philanthropic capital for the public good through social finance intermediaries.
Some provinces, for example, offer a generous tax credit to individuals who invest in Community Economic Development Investment Funds (CEDIF). These CEDIFs in turn invest the money in local businesses and organizations, providing jobs and services to the local community. Like traditional investments, CEDIFs provide a return on investment while supporting the community and growing the local economy.
Many countries around the world are embracing social finance. Portugal, Japan, the UK and the European Union have established social finance funds, and social procurement initiatives have been successfully tested by Scotland, France, Finland and Australia.
Likewise, tThe United Nations Sustainable Development Goals are a call to action to promote prosperity while protecting people and the planet, and companies are increasingly emphasizing environmental, social and governance (ESG) practices, as well as investing socially responsible.
Here in Canada, social innovation and social finance have already proven their value in helping solve problems. The National Table of impact investing practitioners and CAP Finance of Quebec represent dozens of funds across the country with over $ 1 billion in assets and record investments in improving care for the elderly, ensuring food security, increasing access affordable housing and support for women entrepreneurs.
Social finance can generate huge benefits. In 2006, for example, the federal government provided $ 22.8 million in start-up funding for the Quebec Social Economy Chantier Trust, which offers financial products to support the capitalization of social economy enterprises. This raised an additional $ 30 million to launch the fund, and over the next decade 212 investments were made, creating or maintaining 3,183 jobs and mobilizing an additional $ 374 million.
The impacts of COVID-19 have highlighted gaps in our social systems and spurred innovative ideas on how to build a better economy. The federal government has the opportunity to scale up and allow these ideas to flourish through social innovation and social finance initiatives.
It has already taken the first steps in this direction, now the government must keep its promises.
A landmark report was written before the pandemic by the Steering group on the co-creation of social innovation and social finance – an advisory group of leaders from the philanthropic, financial and research sectors as well as the community, which was responsible for helping to develop a social innovation and social finance strategy with the Government of Canada. The report offers key recommendations, including a call for the creation of a social finance fund that would help meet the funding needs of organizations working on positive social outcomes.
Immediately after the report’s release, Ottawa announced it would launch a Social finance fund with funding of $ 755 million over 10 years and a $ 50 million investment readiness program. However, the Social Finance Fund has yet to be rolled out, and after a successful two-year pilot project, the Investment Readiness Program is expected to expire this month.
If implemented, the Social Finance Fund would accelerate the development of opportunities across the country, which would improve access to capital for local organizations working to address social or environmental challenges. It would also increase the opportunities for investors to support the local economy.
WATCH | Finance Minister Chrystia Freeland announces that the Liberal government will table the federal budget on April 19:
The last full federal budget, in 2019, made promises regarding the Social Finance Fund that must be kept. The upcoming April 19 budget provides an opportunity to once again prioritize social innovation and social finance in the face of an unprecedented need. Key actions that need to be taken in the next budget include:
- Implement the Social Finance Fund to stimulate economic recovery linked to COVID-19;
- Expand the investment readiness program into an ongoing program to help organizations access social finance funds;
- Properly endow the 12 recommendations of the steering group for the co-creation of social innovation and social finance.
As we seek solutions to our most pressing existential crises – such as climate change and global pandemics, and the social, environmental and economic devastation they cause – social innovation and social finance should be part of our agenda. toolbox.
An investment in social innovation and social finance is an investment in the future of all Canadians.