Shooting the Rapids – Ballast from the Social Finance Task Force

The community sector in Canada has hit white water and the sound of the waterfalls is echoing louder. 

Non profits, charities, co-ops, and citizen groups  are contending with government funding reductions, more competition for the donor and foundation dollar and scarce additional resources to invest in recruiting and retaining high calibre staff or acquiring the best technology.   And they have few, risk taking funds to try out new ideas and approaches to either old problems or emerging ones.

While on its perilous course the sector can also hear the crash of the waterfalls in the distance. 

We're just not certain how close they are.  We wonder what the loss of tax revenue will do to government spending priorities when the boomers retire?  Will health care costs rise disproportionately as the experts predict?  What impact will that have on social expenditures?  What are the cost implications of people living longer lives?  Will governments have to bail out our pension funds?  Are we looking at a smaller government fiscal pie in the future?

And then there are inevitable surprises.  What's lurking underwater that's causing the rapids in the first place?  Will there be another environmental catastrophe? Another recession? Something else?

In response to these present, potential and predicted funding challenges Social Innovation Generation (SiG) created the Canadian Task Force on Social Finance.   Noticing what was happening in other countries SiG wanted to get out in front of the challenges, to think through the solutions and to be proactive.  They didn't want to wait for someone else to solve our problems.

They presented their seven recommendations before an enthusiastic crowd of 450 last night in Toronto. (November 30,2010)

Their report is a classic example of 'do it yourself public policy'.  They want to protect existing non profit financial resources but they want to lever them to attract new monies.  They want to do more with the precious, collective assets we already have.  They want funding and expenditures to have more measurable impact.  They want everyone, ever sector, to participate in resolving our social and environmental challenges. They want to mobilize private capital (all $3 trillion!) for public good, blurring the lines between making money and making a difference.

You can access, Mobilizing Private Capital for Public Good and the Task Force's seven recommendations here .  Here are a  few highlights:

  • they are challenging Canadian Foundations to use more of their capital assets to achieve social and environmental impact. If 10% of the capital of Canadian foundations was invested in enterprises and activities that were related to their social or environmental mission, an additional $3.4 Billion would be available for public good.
  • they are calling on the federal government to take the lead in establishing along with provinces, philanthropic and institutional investors the Canada Impact Investment Fund.  When national governments elsewhere take the lead with a modest infusion of cash it attracts significant private capital, especially when government dollars can be used as loan guarantees.
  • they want to remove the regulatory barriers to non profits and charities becoming more entrepreneurial and undertaking revenue generating activities.  Right now the penalties if you stray across an ambiguous line are severe.
  • they want pension funds assets of $847 Billion (!) invested in social purpose businesses and social enterprises that are making the community better.  If only a quarter of one per cent was used for social impact another $2 Billion would be available for public benefit.

The report is succinct and readable.  And it is based on a belief in the inherent resiliency of Canadians and their institutions.  We are already in the rapids.  The choice is how we navigate.  If you've ever wondered about the financial future of the social sector Mobilizing Private Capital for Public Good is an excellent pilot.

NOTE:

I am in Toronto for follow-up meetings associated with the release of the report and will write more about the impact of the Task Force recommendations in subsequent posts.



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