A new coalition launched this week with a goal to develop a support network for community finance organizations — also known as place-based or local impact investing organizations — starting in Ontario.

The project is called Catalyst: Community Finance Initiative, and is the effort of 13 major social impact organizations and networks: Pillar Nonprofit Network, SVX, Upper Canada Equity Fund, DUCA Impact Lab, United Church of Canada, Vancity Community Investment Bank (VCIB), SETSI, CapitalW, 10C, the Centre for Social Innovation (CSI), Community Foundations of Canada (CFC), and SI Canada.

Community finance “refers to the local deployment of impact capital, meaning that investments are made with the intention of generating both financial returns and community benefit to address the needs of particular communities, regions, or ecosystems,” according to an SVX blog post about the launch. Community finance organizations may provide loans to small, Main Street businesses that are important to a community, finance affordable housing projects in a particular region, and other investments that generate community wellbeing. “The movement is growing rapidly, as capital moves into the impact investing sector at unprecedented rates seeking local impact.”

What does community finance offer that national or otherwise non-place-based funding doesn’t? “Simply put,” SVX writes, “local capital is highly responsive to local needs. The proximity and connection to community allows for a greater capacity to understand the issues and to mobilize resources to address complex community issues.”

The project will create an ecosystem to support Ontario community investment, while developing partnerships with organizations outside the province to eventually build a national movement. 

The potential for impact in Ontario is big, the coalition says. Nova Scotia has a comparatively well-developed community finance ecosystem, which has mobilized $100 million for local enterprises. Meanwhile, individual Nova Scotians held $166.3 billion in assets collectively in 2019 and Ontarians held a whopping $3 trillion. Unlocking just 0.1 percent of this — through better support for new community finance organizations and those that already exist (like VERGE Capital, DUCA Credit Union, and Community Futures of Prince Edward Lennox Addington) — would mean $30 billion in new, private capital for place-based community projects. 

To unlock that capital, Catalyst plans to “collectively design relevant ecosystem and provincial public policy infrastructure to ensure that community finance institutions can successfully and sustainably start-up and scale their impact; facilitate knowledge sharing amongst place-based finance and capacity organizations; and engage existing and new community finance organizations that can serve organizations, projects, and enterprises in selected urban, rural and Northern communities, alongside mainstream leaders in philanthropy, public policy, and financial institutions.”

Over the next year, the coalition plans to put out research that demonstrates the effectiveness of community finance, create an action plan “including potential policy interventions to scale up community finance institutions in Ontario as well as potential ecosystem infrastructure interventions,” build a “learning community” of community finance organizations, and release tools and templates for community finance organizations to use. 

“We’re (finally) just getting officially started with a collective effort,” SVX writes, and says the organization is “actively seeking collaborators and contributors.” 

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