The Sector

Featured Social Financier: Rashi Foundation in Israel

The Rashi Foundation is an independent, private philanthropic foundation dedicated to assisting the underprivileged in Israel, particularly children and youth. They focus on the geographic and social periphery and on education and welfare solutions that create opportunities and advance social mobility.

The Foundation was established by Gustave Leven (1914-2008), a French-Jewish businessman who came from a family strongly ingrained in philanthropic tradition and culture, and whose experience during WW2 was a key factor in his focusing on Israel.

We have been working since 1984 to realize Gustave’s vision of a stable and prosperous Israel that draws its strength from a society in which every individual has an equal opportunity to realize his or her full potential.

After starting out as a typical grant-making foundation, Rashi has gradually evolved into a social entrepreneur that identifies needs and responds by initiating and building innovative education and welfare solutions.

In the next stage, they developed a unique form of venture philanthropy further by going into direct operation of programs through affiliate associations, and by creating an extensive network of partnerships with other philanthropies, as well as with government agencies. This approach allowed us to increase greatly the scope of our work while remaining highly attuned to the field and responsive to its needs.

SOCIAL IMPACT BONDS

Aiming to advance the field of impact investments in Israel, and social impact bonds in particular, a joint initiative with Social Finance Israel is carrying out feasibility studies to identify social issues that can be addressed through the SIB model. In addition to facilitating the development of innovative solutions, the initiative can pave the road for more players to join in. SFI will develop the bonds for issues that are found to be suitable and will manage their implementation.

In view of the alarming statistic regarding the high poverty rate among single-parent families in Israel, the first feasibility study deals with this issue. Specifically, the study focuses on the 17,000 families who get an alimony allowance from the National Insurance Institute, and represent the most deprived single-parent families. To improve their situation, the intervention will be designed to remove obstacles to gainful employment and improve the earning capacity of the mothers.

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The Sector

BLENDED FINANCING FOR IMPACT:TOOLKIT FOR SOCIAL FINANCE &SUPPORTIVE HOUSING –

A Report by MaRS Centre for Impact Investing

SOCIAL FINANCE AND SUPPORTIVE HOUSING

What is social finance?

Social finance, or impact investing, is an investment approach that focuses on achieving positive social and/or environmental impact alongside some form of financial return. This includes debt and equity investments that range from producing a return of principal capital to offering market-rate or even market-beating financial returns. Impact investing encourages positive social or environmental solutions at a scale that neither purely philanthropic supports nor traditional investment can reach.

Philanthropic grant making and program-related investments can also fall under the broad umbrella of social finance. However, a narrow definition of social finance would only include investments that could generate some form of return. Examples of impact investments could include:

  • A $5,000 equity investment in a local community solar power firm such as SolarShare
  • A $50,000 loan to a fair trade, organic coffee company such as Planet Bean Coffee
  • A $450 million bond issue for a social housing project such as Regent Park, in Toronto, ON

Impact investing is a large and growing asset class. In the United States, JP Morgan and the Rockefeller Foundation analyzed five key sectors—affordable urban housing, rural access to clean water, maternal health, primary education and microfinance—and predicted that over the next 10 years the impact investing market in just these five sectors will grow to between $400 billion–$1 trillion.

In Canada, the social finance marketplace is also expected to grow significantly. From persistent poverty to climate change, we are faced with pressing social and environmental problems at a local, provincial, and national level. Unfortunately, the ability of governments to tackle these challenges is constrained due to ongoing economic challenges and structural financial problems. Social housing providers are longstanding innovators and practitioners of social finance approaches in Canada and around the world.

In Canada, we have been experimenting with debt and equity financing approaches to purchase, build or improve housing with a positive social impact for decades. What is supportive housing? Supportive housing includes housing units or complexes funded specifically for persons living with mental illness and/or mental health problems, persons living with concurrent disorders (co-occurring mental health and substance use issues) or other persons who need support to live independently.

Individuals living in supportive housing could include older adults managing illness, persons who are chronically homeless, persons with disabilities, or other persons with mental health challenges.

“Housing First” is a variation of supportive housing that relies primarily upon private market apartments in scattered sites in the community. This is the approach that has been implemented in At Home/Chez Soi. Portable rent subsidies are key to this model, which enables tenants to rent apartments in locations they choose. The subsidies provide the difference between market rent and the amount available for rent through social assistance. Supportive housing providers have been using this approach to partner with private-sector landlords to increase the supply of rental housing where it is available.

In addition to ensuring affordability, supportive housing exists to provide supports to tenants. An affordable, secure home is essential to assisting individuals to realize their life goals. In Canada, affordability means that the market price or rent is affordable to low- and moderate-income households, measuring 30% or less of their gross household income, not including government supports.

Affordable housing includes what we commonly refer to as social housing: housing built with the financial assistance of governments to provide assistance to low- and moderate-income households. It includes supportive housing, non-profit housing, co-operative housing and housing supported by rent supplements. These monthly rent charges are usually geared to income.

Read the full report here: https://thesectorinc.ca/wp-content/uploads/attachments/BlendedFinancingforImpact_FullToolkit.pdf

The Sector

Social finance around the world

International developments

Although the concept of linking private capital to societal improvement has been around for decades in many jurisdictions, three countries are on the leading edge of social innovations and social finance models:

United Kingdom (UK)

The UK is the world leader in the development of social finance. Since introducing the world’s first social impact bond (SIB) in 2010 – a prevention program to reduce recidivism among Peterborough Prison inmates – the UK has launched 14 national and local SIB projects that target a range of societal issues including “chaotic” families and homelessness. With its “Future for Children” bond, the UK was also the first country to present a public offer for investment in a SIB.

The UK is home to “Big Society Capital,” a social investment bank started by the government to help grow the social investment marketplace, as well as a public company titled simply “Social Finance” that has a similar goal. It has supported the creation of several social investment funds including the Centre for Social Action’s Innovation Fund (£14 million), the Social Outcomes Fund (£20 million) and the Department of Work and Pensions Innovation Fund (£30 million).

The UK is also seeking to improve its legal and administrative environment for social innovation projects by reviewing its Charities Act and making amendments to financial services legislation. In June 2013, the UK will host a G8 Social Impact Investment event in London to discuss, among other issues, the role of social finance in the economic recovery at national and international levels.

United States

To lead the work on social finance, the White House established the Office of Social Innovation and Civic Participation, whose role includes working with the Social Innovation Fund, a grant program that helps non-profits expand effective programs. The 2014 Budget proposed by President Obama (Budget of the United States Government 2014) also included $495 million for “Pay for Success” pilot projects in areas such as job training, housing and education as well as an incentive fund for state and local governments.

A recidivism SIB is underway in New York City, and two other SIBs in the areas of chronic homelessness and juvenile justice are being negotiated in Massachusetts. In California, a demonstration project to test a health impact bond is being launched to address chronic asthma and reduce associated hospital visits by young children. The Harvard Kennedy School has created a SIB Technical Assistance Lab offering pro-bono assistance to states and local governments considering the Pay for Success model. A number of other states and municipalities (e.g., Philadelphia, Utah, Cook County) are also examining how Pay for Success approaches may work in those jurisdictions.

Australia

New South Wales recently signed a contract for its first “Social Benefit Bond” (SBB) which aims to improve services and lives through increased investment in the child protection system. Negotiations are underway for additional SBBs in the areas of family preservation and reoffending, and the region has also started a Social Investment Expert Advisory Group to provide advice on social investment and payment-by-outcomes options.

Canadian initiatives

Many social finance initiatives are already successfully operating in Canada. As social finance has been a bottom-up phenomenon to-date, these activities are largely in the private and NFP sectors. The following are only a few examples of the changing social finance landscape across the country:

  • The Youth Social Innovation Capital Fund (YSI-CF) was created in 2011 in Toronto to support young social innovators. The Fund provides finance (loans), resource support (networking and mentoring) and impact measurement support to help youth develop and launch their social innovations and social enterprises.
  • The MaRS Centre for Impact Investing was established in late 2011 to act as a hub and incubator, encouraging collaboration among private, NFP and government sectors. The Centre is working on a Social Venture Exchange, the certification of “B” corps in Canada (corporations that use the power of business to address social or environmental problems) and the annual Social Finance Awards.
  • The YMCA Toronto issued a “community bond” in December 2011 to fund 300 housing units for women and children. Worth $1 million, the bond was purchased by the Muttart Foundation and will pay a reasonable rate of return.
  • LIFT Philanthropy Partners uses venture philanthropy to strategically invest in Canada’s NFP sector to deliver social impact to tackle pressing societal challenges, including employment, literacy, skills training, health and wellness to improve the social well-being and economic prosperity of Canadians.
  • BC Social Ventures Partners (BCSVP) pools funding and expertise to donate money, time and advice to help targeted NFPs achieve their goals. BCSVP helps organizations build capacity and assists community organizations to grow and work effectively toward their missions. The group focuses on assistance to children, youth and families as well as local social enterprises.
  • RBC’s Impact Fund, created in January 2012, is investing $20 million to support the development of solutions for environmental and social problems. Priority areas include employment opportunities for newcomers and youth, environmental sustainability and water management projects.
  • In British Columbia, the Vancouver Foundation and credit union Vancity created the Vancity Resilient Capital Fund with a grant from the Government of British Columbia. The pool of $15 million dollars is earmarked for investment in social enterprises.
  • Quebec credit union Mouvement des Caisses Desjardins developed the “Placement à rendement social,” an investment fund focused on housing, environmental and cultural projects that allows the public to invest via their retirement vehicles (RRSPs) or tax-free savings accounts.

Governments of all levels have taken notice of these exciting developments in the NFP and financial communities, and many governments are exploring innovative ways to tackle intractable societal problems – including:

British Columbia

The British Columbia Social Innovation Council recommended in 2011 that the private and NFP sectors partner with the provincial government to create SIBs to fund prevention services, improve social outcomes and attract new sources of social investment capital. It further recommended that social enterprises gain access to government programs and supports typically provided to small and medium-sized enterprises, for which they are currently not eligible. In 2012, the provincial government co-sponsored “B.C. Ideas,” a province-wide innovation competition that generated 466 ideas with winners sharing over $270,000 in funding. The province’s Budget 2013 highlighted British Columbia Social Innovation Council’s recommendations, and echoed continued support for social innovation and entrepreneurship.

Alberta

Alberta’s Budget 2012 mandated results-based budgeting and reviews of all government programs and services, as well as support for spending based on outcomes. Budget 2013 committed to accelerating this process, including work to evolve Alberta’s Persons with Developmental Disabilities Program into a more outcomes-based service delivery orientation.

Ontario

Ontario’s Budget 2012 committed to exploring opportunities for new partnerships that encourage improved outcomes at a lower cost by transforming traditional approaches to the delivery of services. The 2012 Commission on the Reform of Ontario’s Public Services, also known as the Drummond Report, recommended pilot projects to test SIBs across a range of applications.

Quebec

The Minister for Industrial Policy and the Banque de développement économique du Québec planned to introduce a framework law in the National Assembly during the Spring 2013 Parliamentary session to recognize, promote and develop the social economy. To combine many economic development programs and simplify access to funding for NFPs, the Province will create the Banque de développement économique du Québec. Budget 2013 committed to increasing access to AccèsLogis Québec, a financial aid program that encourages pooling of public, community and private resources to produce social and community housing.

Newfoundland and Labrador

Newfoundland and Labrador’s 2012 Speech from the Throne signalled an interest in exploring innovative initiatives for tackling complex challenges.

Nova Scotia

Nova Scotia’s Budget Address 2012 committed $200,000 to develop a social enterprise strategy that will support communities and businesses. Innovative strategies have also been outlined through the JobsHere agenda, which includes implementing a Social Enterprise Loan Guarantee Program. The 2013 Speech from the Throne declared that Nova Scotia would be the first Canadian jurisdiction to offer SIBs.

Municipal

Social finance initiatives are also being developed within municipal governments. One example is the City of Toronto’s Toronto Atmospheric Fund (TAF), which seeks to address emissions from buildings and transportation. TAF’s three programs — Incubating Climate Solutions, Mobilizing Financial Capital and Mobilizing Social Capital — promote energy efficiency retrofits in buildings, electric vehicles for fleets, efficient transportation of goods, natural gas alternatives like geothermal, and social innovation to support emission reduction strategies.

Source Article: https://www.canada.ca/en/employment-social-development/programs/social-finance/consultations-report.html

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The Sector

It’s time for a Social Innovation and Social Finance Strategy for Canada.

In 2017, the Government of Canada created the Social Innovation & Social Finance Strategy Co-Creation Steering Group. The group provided 12 recommendations to advance social innovation and mobilize social finance in Canada. In November 2018, the Fall Economic Statement from the federal government outlined a proposed $755M Social Finance Fund to invest into socially innovative projects.

Here are the 12 Recommendations:

1. Governance and Public Service Infrastructure. Anchor commitment and long-term policy action toward social innovation and social finance in Canada through federal framework legislation.

2. Governance and Public Service Infrastructure. Establish and fund a permanent multi-sectoral Social Innovation Council.

3. Governance and Public Service Infrastructure. Create a permanent Office for Social Innovation.

4. Capacity and Skills. Improve social purpose organizations’ access to federal innovation, business development and skills training programs.

5. Capacity and Skills. Establish a cross-sector Social Innovation Ecosystem Program to address gaps in early-stage support, capacity building and impact measurement.

6. Funding and Capital. Create a Social Finance Fund to accelerate the development of social finance ecosystems across Canada.

7. Funding and Capital. Ensure federal funding practices support and enable social innovation.

8. Market Access. Incorporate social procurement guidelines, tools and training into Government’s focus on a cohesive sustainable procurement plan.

9. Policy and Regulatory Environment. Address the legal and regulatory issues impeding charities and non-profits from engaging in social innovation, social finance, and social enterprise.

10. Policy and Regulatory Environment. Develop regulatory innovation capacity using ‘sandboxes’ to explore and experiment with new models.

11. Evidence and Knowledge Sharing. Establish a Social Innovation Evidence Development and Knowledge Sharing Initiative.

12. Awareness and Mobilization. Coordinate a national social innovation and social finance awareness campaign.

Source Article: Social Innovation and Social Finance Strategy for Canada: https://sisfs.ca/

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The Sector

Getting Ontario Readyfor the Social Finance Fund – Candian CED Network

Authors: Denyse Guy and Carolyn Pletsch, Guy & Associates Advisory Group: Michael Toye, Canadian Community Economic Development Network (CCEDNet); Liz Sutherland, Ontario Nonprofit Network (ONN); Peter Frampton, Learning Enrichment Foundation (LEF); Elspeth McKay, Operation Come Home; Rosalind Lockyer, PARO Centre for Women’s Enterprise (PARO)

Executive Summary

In the fall of 2018, the federal government announced an $805 million investment ($755 M for a Social Finance Fund and an additional $50 M for an Investment and Readiness Stream). It was a move that galvanized the Canadian social economy ecosystem and captured the imagination of many community members.1 This initiative was established in the 2015 mandate letters to the Ministers of Family, Children and Social Development and Employment, Workforce Development and Labour.

Their responsibility was to develop a Social Innovation and Social Finance Strategy for Canada so that it would contribute to the development of an inclusive society. To facilitate this goal, a SI/SF Co-Creation Steering Group was appointed and asked to prepare recommendations for the SI/SF Strategy. In August 2018, its twelve recommendations were released in a report entitled Inclusive Innovation: New Ideas and New Partnerships for Strong Communities.

Currently, the focus is on the Investment and Readiness Stream which will support social purpose organizations to improve their readiness for investment, and by so doing, successfully participate in the social finance market and provide creative solutions for the most challenging issues facing vulnerable populations. There are concerns that the resources made available in this initiative need to be delivered in ways that reach and effectively support the grassroots social economy organizations working directly with vulnerable populations.

This has driven convening organizations to undergo processes like this. The outreach and engagement reflected in this report acknowledges different perspectives about barriers and solutions. The sector has no shortage of innovative ideas to develop and is eager to share plans for new projects and create new partnerships. There is no doubt that the federal contributions announced in the 2018 Fall Economic Statement are timely, and represent a major opportunity to strengthen the ecosystem and supports for the social economy, including social innovation and social finance.

This survey was one of the key activities of the Canadian Community Economic Development Network’s engagement process to raise awareness of the Social Finance Fund and hear a range of grassroots perspectives. This process was guided by Vision, Mission and Guiding Principles. Through this research, completed with the assistance of 150 social economy leaders (respondents), we gathered ground intelligence on what sector members were thinking about and planning for in terms of projects and partnerships. We learned how best to support grassroots community groups. Through this process, we also mobilized knowledge and raised awareness of the Social Finance Fund.

Survey development took place over a two week period. As wide a range of respondents as possible was sought in the limited time and resources available. The completed contact list for potential respondents was 60 organizations, eventually producing a total of more than 150 respondents. The timing of the survey was during the period of February 21 to March 28. Social innovation and social finance approaches were sampled.

We found that in addition to the four approaches itemized in the survey, the respondents were practicing other approaches. Respondents’ needs were identified by the six interconnected areas recommended by the Co-Creation Steering Group. These areas were ranked to assess priorities. All six interconnected areas ranked closely in ratings. This supports the theory that all six are legitimate needs. Respondents identified barriers and solutions as part of the six interconnected areas including capacity building, funding and capital, market access, policy and regulatory environment, evidence and knowledge sharing, plus awareness and mobilization. This report summarizes many of their views.

What we also discovered is that there is no shortage of innovative ideas or interest in developing new services/tools. Social innovation is alive and well in the social economy sector. However, this initiative must have a unified strategic plan and clarify roles in the ecosystem. Additionally, new projects were shared that would benefit from Investment Readiness supports, as well as accessible capital for investment. We also confirmed the current key assets in Ontario that support social purpose organizations. The social enterprise ecosystem is well positioned to accelerate, scale and grow a marketplace that puts people and the planet first.

Source and full report here: https://thesectorinc.ca/wp-content/uploads/attachments/getting_ontario_ready_for_the_social_finance_fund_v2.pdf

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