Here’s how the federal government can put its social finance strategy at the heart of its recovery plan

After fighting unprecedented public policy and political battles resulting from COVID-19, the Canadian government has hit the reset button. We are quickly heading towards a Throne Speech, likely followed by a fall economic statement or a federal budget. Whatever the range of reasons behind prorogation, it has created an emerging opportunity for the social innovation and social finance strategy to be a key feature of our national effort to drive an inclusive recovery.

What could this mean for the social innovation and social finance strategy, including initiatives like the Social Finance Fund?

There has been significant momentum building on the social finance and social innovation agenda driven by a growing constituency coalescing around common ideas and collective efforts. However, these efforts have not yet seen major results in terms of the government’s COVID-19 response agenda. Although there have been positive signals from the federal government with a promise to review the rollout of the Fund, the path over the summer still seemed somewhat uncertain without any significant funding or policy announcements.

But recent statements make it clear that the federal government is seeking a more ambitious agenda to build back better through an inclusive recovery that creates a more resilient Canada.  This creates a more open window for social enterprise and social finance to be unleashed as an approach and tool to achieve that outcome. 

The alignment is clear. Social finance and social enterprise approaches are designed to build a more inclusive society and economy.

There is already a viable roadmap for a national strategy. There are the recommendations of the Social Innovation and Social Finance Strategy Co-Creation Steering Group, consensus priority policy recommendations of sector organizations, and significant groundwork laid by the Senate, catalyzed by leaders like Senator Omidvar. This is a national collective effort that has now spanned over three decades, including the groundwork of the Canadian Task Force on Social Finance. A more robust strategy and associated investment would be building on a solid and tested foundation.

Community institutions from the Centre for Social Innovation (CSI) in Toronto to EntrepreNorth in Northern Canada already help organizations and businesses start-up and grow enterprising solutions that address challenges, from creating sustainable livelihoods to reducing greenhouse gas emissions. These capacity-building organizations are purpose-built to support thousands of social purpose organizations to bring their social and environmental solutions to market. These community institutions are self-reliant and income-generating with established programs and offerings at the ready. Strategic investment now through a well resourced social finance strategy will help these institutions to support enterprises and organizations who are seeking to adapt, and to build the next economy for all Canadians that also meets our climate change goals.

The social finance sector also drives local and national investment. Dozens of current and emerging national and place-based funds such as VERGE Capital and community capital institutions such as Vancity Community Investment Bank (VCIB) are mobilizing capital across the country, financing organizations from affordable housing providers to sustainable food businesses. These organizations make critical debt and equity investments into hundreds of enterprises that will be at the forefront of economic and social pandemic recovery across the country. 

This critical capital and capacity infrastructure can be re-deployed and scaled up, and new infrastructure can be created to support a regenerative recovery.  

If we are going to build back better using these tools and approaches, we will need to see the social innovation and social finance strategy featured in the government’s roadmap for recovery: the Throne Speech and subsequent budget document. The Social Finance Fund would be one component of a supercharged social innovation and social finance strategy designed to support an inclusive and regenerative recovery.

What could supercharged strategy embedded in the recovery plan look like?

Here’s how the social innovation and social finance strategy could support an inclusive recovery. Firstly, there would need to be a more substantial investment in the social innovation and social finance agenda, including the acceleration of the Social Finance Fund through a larger up-front commitment of capital, alongside support for capacity building including new funds for social entrepreneurs, intermediaries, and ecosystem infrastructure.

Second, the strategy would not be limited to a single Ministry or Department. It would be driven by a whole of government approach with a home at the Centre (appropriate representation in the Prime Minister’s office and the Privy Council office), with a Minister playing a leadership role (perhaps the Minister of Families, Children and Social Development), and perhaps a Parliamentary Secretary to support implementation. Accordingly, the inclusion of social innovation, social finance and social enterprise strategies would be integrated in Ministerial mandate letters as a recommended approach to help build back better. For example, relevant Ministers may be mandated to mobilize social finance and social enterprise strategies to support recovery efforts through Crown corporations like CMHC and BDC.

There would not be a single entity or sector organization driving the effort, but a collection of nodes and existing networks with the infrastructure to implement the strategy. It is believed that an ecosystem approach at a national and regional level would be most effective in advancing this effort in collaboration with the federal government. This is seen as more resilient when compared to a traditional supercluster with a single geographic focus, or the recent Canada student grant program which had a single lead organization. Although different from a traditional supercluster, this strategy could also be considered as a social enterprise and social finance supercluster.

Thirdly, the strategy would have identifiable target outcomes that align with national economic, environmental and social objectives including: supporting enterprises and organizations in driving an inclusive and regenerative recovery, creating and maintaining jobs, catalyzing investment, and achieving positive impact in line with the Sustainable Development Goals (SDGs). The strategy could also have identifiable high impact areas of focus such as: food security, health and wellness, housing and homelessness, reconciliation, climate action, structural inequality and racism.

Fourth, the strategy must be inclusive of all of Canada’s diverse peoples through representation and resource allocation that is inclusive in terms of gender and race, including Black Canadian, Indigenous and other minority-led organizations. 

The strategy would also have a mandate to drive cross-sectoral collaboration, including government, community, and private sector. It could be interesting to consider a cross-sectoral team pulled together to implement this agenda, including public servants and individuals seconded from leading organizations in the social innovation sector.

Lastly, there would be clearly identified areas of need and focus including: capital, capacity, and ecosystem infrastructure. The strategy would need to support social purpose organizations (SPOs) navigating a significant business disruption and/or adapt their business or organization to respond to the crisis. It would need to direct capital into communities, organizations and support organizations to advance relief, recovery and regeneration. This can be achieved by accelerating the deployment of the Social Finance Fund to finance the Indigenous Growth Fund, alongside current and emerging national and place-based funds across Canada. And the strategy would need to create new institutions, regulations, and infrastructure to support long-term recovery and resilience. Community capital institutions would be a critical component of any inclusive recovery, and there would be a need for a thoughtful build out of this systems infrastructure.

What do we need to do now?

The path for social innovation and social finance as a priority policy approach for our national recovery effort would not in itself be a slam dunk. If we want to see action in the Throne Speech and beyond, we need to continue to make the case for the need and the utility of leveraging the Social Innovation and Social Finance Strategy as a tool for a more resilient recovery.

We need to engage a wider political sphere to support the agenda. There is a growing interest in this work amongst political leaders, but it will be critical that the strategy has the widest possible support for sustained success. Accordingly, there is a need and opportunity for leadership by individual MPs to support this work. There are already positive signals on this front with the start-up of the Liberal social innovation agenda. But these ideas should not only be seen as red, blue, orange, green or any other single political stripe. It will also be critical that the social innovation and social finance agenda is recognized as a non-partisan issue, as has been the case in the UK and other countries that have sustained this agenda over time through successive governments. Sector and political leaders will need to reach across the aisle to ensure all parties understand the value and key components of this kind of strategy. Beyond MPs and political party leadership, it will also be critical to engage policy, corporate, and community leaders outside the House of Commons, from credit unions to labour leaders to traditional financial institutions.

We need to leverage and demonstrate the potential of social impact work to support a national recovery effort. 

We need to leverage and demonstrate the potential of social impact work to support a national recovery effort. The strategy will have a greater chance of success by demonstrating the significant amount of policy, political and community capital available to support a sustained national social innovation agenda. 

There is also a wide and deep constituency that supports this agenda at a local, regional and national level. There are social innovation and social finance organizations with significant support in communities across Canada, from Pillar Nonprofit Network in London and Esplanade in Montreal to Shorefast in Newfoundland and SCALE Collaborative in Victoria. There are dozens of organizations across the country with the track record, experience, and capacity to help deliver on a national strategy as partners, collaborators and supporters. This will allow for more rapid implementation and potential for success, which will be a critical component of any policy actions that are driving a resilient recovery

Social finance approaches and organizations will also fill key gaps in Canada’s recovery efforts.  Although remarkably robust, the current federal response does not fully meet the social, economic, and environmental challenges that we face. A national recovery plan will need to catalyze new investment that can protect and maintain employment. Social finance organizations mobilize billions in capital at a local and national level, they help to maintain and create thousands of good jobs. And there is significant potential for new capital as investors increasingly seek investment opportunities that generate a more positive impact. Our economic recovery plan will also seek to address long standing issues from structural inequality to climate change.  Social finance organizations are uniquely placed to finance and build the capacity of enterprises, organizations, and projects that tackle these challenges, from renewable energy projects to enterprises that seek to serve and empower women and BIPOC communities

Canada needs social innovation and social finance tools and approaches to drive a strong, resilient and inclusive recovery. And the federal government can make that possible by making this a feature of the recovery plan in the Throne Speech and the government’s fall financial update. The world of social impact has got work to do to get this on the agenda this fall.

Our team is working around the clock to deliver insightful stories, analysis, and commentary on how the social impact world can build back better post COVID-19. If you liked this story, please consider becoming a member. Start a 14-day free trial now.

Tell us this made you smarter | Contact us | Report error