Impact investing can go very wrong. Here are the three biggest pitfalls the social finance fund should avoid
The social finance world loves to talk about the “win-win” of social and financial returns. Failures, however, get much less airtime. As the government’s Investment Readiness Programs helps organizations prepare for social finance, understanding potential pitfalls could prove vital to maximizing positive social and environmental impacts – and avoiding some negative ones, too.
Social finance could help charities support Canada’s COVID-19 recovery and become sustainable, but many are not ready for investment. Two-thirds of charities don’t even know what it is. Having lost billions in revenue, charities cannot afford to miss out on new sources of income.
Homelessness rates will rise from already crisis-level after the pandemic. Systemic racism means racialized communities could be left behind in recovery. And underlying all this is that COVID-19 won’t be the last global crisis we face — climate change will make sure of it. These problems need innovative, long-term funding. Just in time for the launch of Canada’s $755-million Social Finance Fund.
Local economies are devastated in the wake of COVID-19. Social purpose organizations are struggling. Already marginalized populations have been disproportionately impacted. The $755-million Social Finance Fund was announced years before any of this happened, but now it has the potential to support Canada’s much-needed recovery.
The government’s landmark Social Finance Fund was set to launch this year, claimed to generate up to $2 billion in economic activity and create 100,000 jobs. But where do those plans stand in the midst of 2020’s extreme events, and what role could it play in rebuilding communities after COVID-19? In the first article in a new special report, Future of Good examines what the fund means for Canada’s social finance market, and for societal recovery.