Innovative Social Finance

Have you ever asked yourself why money exists? Have you ever dreamed of what it could make happen in your community? Have you ever wished you could invest your money in a way that aligns with your personal values? As an investor or funder, have you ever wanted to extend the impact your money has?

Access to money builds local economies. Every economy needs financing. Every economy needs investments and returns on investment. Our challenge is to rethink what we mean by all these so that we can create a vibrant, just, local and planet-friendly economy. Our challenge is to expand our understanding of investment. It is to invest in ways where the return is social as well as financial. It is to demand that our investments work hard for us and for our community.

This is innovate social finance. And it is essential to advance community economic development in Calgary. It’s about finding new ways for people to invest. It’s about making investments that support local enterprise. It’s about setting expectations that solid financial returns will be strongly matched by social and environmental benefits whether you’re a shareholder, a donor or a funder.

It’s about putting your money where your roots are.

If you’re interested in seeing how this works in practice, join the Thrive network. No matter who you are or what organization you represent, rethinking the value of investing will open a whole new world.

Evergreen Theatre – A Unique Community Space

When faced with the termination of their lease, Evergreen Theatre wanted to do more than just move. They decided “it was time to take a big risk” and purchase a building that could be remodeled into viable and vibrant community space – a decision that lead to the creation of Evergreen Community Spaces. I had the opportunity to speak with Artistic Producer Valmai Goggin their move, their funding, and their integration into Mayland Heights. In terms of choosing a location, they wanted something central and accessible. The north-east, said Goggin, is an under-serviced area, with little access resources, and would benefit from the addition of a sustainable, collaborative, and socially responsible space.Studio Signs

Evergreen Theatre knew they would not be able to qualify for a traditional loan. After searching for non-traditional funding models and secured funding with the Social Enterprise Fund in Edmonton. After applying and securing a mortgage through the fund, the company was able to purchase their new home and begin revamping the space. Goggin and her team could not be happier with the results, saying “we have partners that are invested more than just financially. They want the entire project to succeed.” The funding through the Social Enterprise Fund also allows Evergreen Theatre to give back to the community in a unique way, with the interest they pay on the mortgage going back in to the endowment fund. “We’re supporting other projects in the community,” Goggin stated, “simply by making mortgage payments.”

Stair Way Correct

When asked about the impact that the new space has had on the community, Goggin was quick to point out that they are the new neighbour in the area and that they want to be respectful of the work already being done to revitalize the area. The introduction of Evergreen Community Spaces to Mayland Heights is just “part of the ongoing resurgence of the north-east”  she said. They’ve begun facilitating access to programming in the community, providing a dozen different programming streams. They’ve also started renting office spaces in the building to create a diverse internal community and to get more people coming through the building. “We want to be known in the community, to have good neighbour connections. True community building is the best form of integration,” said Goggin, excited for the work to be continued in 2016.

The new space is simply beautiful, featuring a brand new cafe, modern rooms for meetings and dance classes, and plenty of local art. Best of all, it’s completely open to the public. Encouraging all Calgarians to come experience Evergreen Theatre’s new home, Goggin said “we have an open door policy. We want people to wander in and poke around.”

Bounce House

 


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Doing Business Differently with the Alberta Impact Fund

**This is a special blog post as part of a series highlighting social entrepreneurship in southern Alberta as part of Simon Fraser University’s CED Certificate program

 

Driven by a belief that business is an agent for radical change, Rosalynn Dodd’s entrepreneurial nature has her never quite satisfied with the status quo. Her willingness to take a hybrid approach to find solutions for lasting change is best exemplified with the Alberta Impact Fund. Originally intended to address poverty through business solutions, the Poverty Reduction Fund has morphed into the Alberta Impact Fund.

Rosalynn and her partner have a consulting company, Creating Eudomania, offering services to entrepreneurs seeking to create social impact in their business practices. “The Alberta Impact Fund is one way of scaling up our activities to work with more companies” says Rosalynn “creating a movement and proving that business can be a force for good in the world.”

Did you know, small businesses in Alberta represent 95% of all companies in the province? These businesses are the cornerstone of our economy, but access to capital and capacity building consistently rank as the biggest challenges facing these small businesses. More specifically, acquiring capital for social impact is a challenge as social finance tools are virtually non-existent in Alberta.

Rosalynn and a small team of committed individuals from various sectors chose to take on this challenge. They are developing the Alberta Impact Fund using a private debt fund that integrates social and environmental targets into the model. They intend to raise $25 million in capital from impact investors to invest in up to 40 of Alberta’s small & medium sizeAIF Final Logod businesses. These are businesses interested in blended value returns that have a willingness to transition towards sustainability.

The fund provides capital to businesses to integrate social or environmental impact into their business practices while offering capacity building in the areas of sustainable strategic planning, governance & leadership development. Companies would complete the B Impact Assessment at the outset of the investment and again at the end of the investment period. By aggregating impacts from companies that have accessed this capital, the fund will demonstrate and showcase movement to a more resilient & diversified Alberta economy.

This initiative has met challenges along the way. “They have faced many obstacles over the years. Impact investing terminology has several nuances so communicating the fund has been a challenge. The biggest hurdle has been regulatory restraints with the Alberta Securities Commission. They have had to redesign the prototype of the fund over the years to ensure they remain within regulatory rules,” reflects Patti Dolan. Patti is a financial advisor specializing in socially responsible investing. She has been a sounding board to Rosalynn and the fund development team since the early ideation phase of this initiative.

Rosalynn’s tenacity along with that of her team, generous in-kind support from Bennett Jones LLP and support from experts in the impact investing sector have been instrumental in overcoming these challenges. “It has not been easy” says Patti. “There have been many times they have wanted to quit, but they truly believe in the fund and have persevered. I admire their spirit and fortitude.”

For this ambitious initiative to succeed several things are needed in the outlying ecosystem:

  • A robust sector of impact investors committed to blended value returns. Impact investing generates a measurable social and/or environmental impact alongside a financial return.
  • Entrepreneurs that are committed to integrating social and environmental impact into their business practices.
  • Growing awareness that blended value returns are viable and resources are available to support that transition.
  • Policy change that enables the average Albertan to invest locally. Currently, only a small segment of Albertans that are accredited investors are able to invest in local businesses.

Rosalynn is also considering the type of financing they will offer. Originally conceived as loan capital, they are also considering the implications of equity financing similar to venture capital models. Consideration is also needed related to the initial stages of the fund. Raising a significant pool of capital prior to offering investments to small businesses may present challenges. The time delay in raising that amount of capital may slow the momentum that’s been growing in bringing this social finance tool to market.

The Alberta Impact Fund aims is to create economic innovation, social prosperity & environmental integrity by providing capital and capacity building to Alberta’s small & medium sized businesses. This fund is a pioneer, addressing the need for social finance in Alberta and self-determining a new path for doing business differently.

What can you do?
• Learn more about local investment tools in Alberta through Unleashing Local Capital
• Make the 10% Shift in your spending habits to support local business
• Stay tuned for more updates as the Alberta Impact Fund evolves

Financial tools for social innovation in Alberta

Tim Draiman

Tim Draiman, executive director of Social Innovation Generation (SiG)

 

Imagine yourself as a grain farmer in rural Alberta. You sell crops to a local grain terminal, but its owner hopes to increase revenues by centralizing grain collection.  You face the prospect of driving 100 kilometers to Edmonton to sell your grain – now with higher costs. What will you do? Seth Leon, research officer at Alberta Community and Co-operative Association (ACCA), would suggest you chat with Westlock farmers.

In 2002, Westlock community members raised $1.2 million to buy their local grain terminals using the New Generation Cooperative model (NGC). So far, so good! After the first year, Westlock Terminals investors – more than 200 local farmers and local business owners – received a dividend of 7%. It is one of the busiest grain terminals in Western Canada today!

Seth Leon

Seth Leon, research officer at Alberta Community and Co-operative Association (ACCA)

 

Seth shared the story of Westlock Terminals June 9th during a fascinating conversation on social finance organized by Thrive and Calgary Economic Development. This discussion revealed that this small Albertan community is not simply lucky. Tim Draimin, Executive Director of Social Innovation Generation (SiG), shared with the audience that financial returns of impact investing – another name for social finance – is substantial. When surveyed, 87% of investors who chose to support social or environmental initiatives “either met or outperformed expectations in 2013” in terms of financial return. Impressive!

Tim describes social innovation simply, as things that reduce our sorrows and multiply our joys. Many aspects of our society that we now take for granted were social innovations in their early days. Think of labor standards, antibiotics, and social media. More recent social innovations include collective impact, and the emerging sharing economy.

Social finance is one handy instrument in the larger social innovation toolbox. It will not cure all social issues, just like antibiotics have no use for flu. Still, the people of Westlock invested in a business that yields sustainable financial dividends along with important social improvements. Any other rural and urban community can do the same.  Want to know how?

Take actions:

  1. Learn how to create a cooperative in your community with ACCA’s Guide for Community Leaders.
  2. Register for the 16th Soul of the City: Why the Collaborative Economy is changing everything on June 25: follow the link for more details and RSVP.

Written by Hanna Zavrazhyna

How local benefits individuals and communities

Michael Shuman pic

Michael Shuman is a powerhouse in the localization movement. An economist, lawyer and prolific writer, he has done pioneering work to show that local businesses are key for economic development and are highly effective. “We’ve won the war on ideas,” says Shuman. “Even HSBC wants to be ‘The World’s Local Bank.’ We’ve also won the war on evidence that local economic development is far more effective and cost efficient than what is practiced today.”

Research shows that communities with a high density of local business have higher per capita job growth and higher per capita income growth. Other studies show that a strong local economy increases civic engagement, fosters social responsibility, improves public health, and facilitates environmental protection.

To gain all the benefits of local, Shuman argues, we must go way beyond the notion of spending dollars at local ‘Mom & Pop’ shops. Shuman challenges us to look deeply at what it means to localize. Where do your dollars go when you make a deposit at your bank? Who benefits from your mortgage payment? How are foundations and government participating in local economic development?

“Most economic development today is wasting money on attracting or retaining nonlocal business,” complains Shuman. “It’s far smarter not just to focus on locally owned business but to support them through private enterprises that are self-financing entities I call “pollinators. For example, rather than build a business incubator that costs the government money every year, do what Fledge in Seattle does: charge incubated companies a percentage of their annual revenues for a few years to underwrite the next round of incubation.”

One might argue that localization in a city as prosperous as Calgary is unnecessary. Shuman warns, however, that “economic development based in one industry – like fossil fuels – only works when you reinvest your short-term bonanza in local business for the next generation.  Diversification is the ticket to long term prosperity.”

REAP members are a significant economic force for long-term prosperity. Together, we represent 7,500 locally rooted jobs and $8.5 million in charitable contributions. Talk about reinvestment!

The next frontier, according to Shuman, is our investments. Canadian businesses with the highest profitability have 10-20 employees—with profits 60% higher than those traded on the Toronto stock exchange. Yet almost none of Canadians’ retirement savings are being invested in these small businesses. “Local investment,” Shuman argues, “not only can deliver great returns to your community, but also holds the promise of paying better returns to you personally.”

To learn more about how to use your dollars to grow the local economy join REAP, Thrive and the Arusha Centre during Down to Earth Week and hear more from Michael Shuman.

Take Action:

1. Propel your impact initiative forward with expert advice from Michael Shuman and networking with Calgary’s social innovators on April 17th at Social Innovation Pollination. Click here to register now through Eventbrite.

2. Celebrate the world-wide movement to localize with Michael Shuman, live music, a local market, workshops and family fun at the ReLocalize Fair on April 18th. Click here for more details.

3. Learn how to align your foundation’s investment strategy with its philanthropic efforts at Brunch and Conversation with Michael Shuman on April 19th at Hotel Arts. Click here to purchase tickets now through Dexterity Ventures.

4. Tweet about any of the above events and tag @reapcalgary and/or use the hashtag #BeLocal for a chance to win one of Michael Shuman’s books!

5. Review Michael’s Small-Mart Revolution Checklist and consider the right next step for localizing your life and your business.

6. Read Michael Shuman’s new book The Local Economy Solution: How Innovative, Self-Financing ‘Pollinator’ Enterprises Can Grow Jobs and Prosperity.

ODCs: an opportunity for local investment

This is part one of a two part series on local investment. Part two will focus on local investment in the Calgary setting.

How much of your invested money stays in the local economy? Chances are, not much. I sat down with Seth Leon of the Alberta Community and Cooperative Association to discuss the up-sides of investing more of our money in our own community. The benefits are clear: a greater percentage of dollars spent locally stay local, it supports businesses that are more likely to act as a contributing member of the community, and the development of an entrepreneurial citizenry. Despite these benefits, very few people think local when they think of their investment portfolio. Continue reading “ODCs: an opportunity for local investment” »

A Geek, a Conversation Killer & a Social Impact Market Creator. Stephanie Robertson discusses her journey in building SiMPACT Strategy Group.

Written by Allison Smith, Thrive

“I use to be a professional dinner party conversation killer,” says Stephanie Robertson, the founder of SiMPACT Strategy Group. Ten years ago her work was barely talked about, and often lost among her peers. Now, with a lot of hard work to create a prosperous market, Stephanie has managed to turn the unknown into a thriving curiosity among Calgarians. Continue reading “A Geek, a Conversation Killer & a Social Impact Market Creator. Stephanie Robertson discusses her journey in building SiMPACT Strategy Group.” »

Community Economic Development Investment Funds: the Nova Scotia Experience

                         

 Written by Allison Smith, Thrive

What: Calgary Community Capital Network is hosting a meet-up focusing on CED Investment Funds.

Where: Calgary Economic Development- 5th floor, Global Business Centre, 136 8th Ave SE

When: August 13th from 10:00am – 12:00pm

This is a two part event:

1)Webinar presentation from 10:00am – 11:00pm

2)Facilitated local discussion from 11:00am – 12:00pm

Background Information: Community Economic Development Investment Funds are pools of capital, formed through the sale of shares (or units), to persons within a defined community, created to operate or invest in one or more local businesses. The Nova Scotia Equity Tax Credit encourages local residents to invest in small businesses through CEDIFs with a personal tax credit of 30 per cent. Over the 14 years of their existence, CEDIFs have grown from an untested concept to a proven model for community capital development that now manages more than $50 million in 48 funds, all raised from local individuals. The model has been transferred to Prince Edward Island and other provinces have also expressed interest.

This session will introduce the CEDIF model, illustrate the impacts it has had redirecting investments for local impact, and consider key lessons from Nova Scotia’s success.

The event is co-hosted by The Canadian CED Network, Thrive-Calgary’s CED Network, and Calgary Economic Development.

For more information visit the meet-up: http://www.meetup.com/Calgary-Community-Capital-Network/events/131528582/

Social Impact Bonds and their Role in Canada

Written by Mark Hlady, Finance for Good

We are on the verge of a revolution in social service delivery. Our publically funded system does not have the resources to lead this revolution alone. Social impact bonds (SIBs) allow private sector champions to make profitable investments to enhance our community and save our government money.

Through research, anecdotal observation, and conversations with local government we’ve recognized that government decision makers around the world tend to be caught in a cycle of reactionary spending on social services. Most funding goes towards programs that help individuals only after an issue has arisen: hospitals help individuals who have become ill, prisons incarcerate individuals who have committed a crime, and shelters provide beds to individuals who are homeless. Significant research has shown a more effective social system would focus on preventative measures, identifying the root causes behind social issues. What if we could prevent individuals from ever becoming ill, re-offending, or becoming chronically homeless? Doing this would not only create better lives for our citizens, it would also create significant economic savings for our government.

So, if preventative spending is more effective and cheaper, it’s logical to question why such a system has yet to be adopted. There are two key reasons for this; first, preventative spending inherently caries a degree of uncertainty because funding is provided to help individuals who are not in need of remedial care (e.g., hospitalization or incarceration) and many service organizations do not have the robust data sets required to prove the effectiveness of such programs. Second, rising healthcare and correctional system costs have trapped the government in a cycle of reactionary spending in which all available funds are being dedicated to those immediately in need, and an investment in preventive care is deprioritized. Together, these two broad challenges create the impetus behind social impact bonds.

Social impact bonds (SIBs) use funding from private investors to scale-up innovative social programs. The social benefits of the program are linked to economic results (e.g. reduced healthcare costs, lower prison costs, increased employment) and the effectiveness of the program is monitored and tracked. If the social program is able to achieve its target outcome, the government will pay investors back their initial capital, plus an incremental return. We refer to this structure as “pay-for-success” since the government is only required to pay if the program is proven successful.

The SIB concept began in the UK. In 2010, Social Finance UK raised £5 million which was used to develop a collaborative system of service providers who together help reduce recidivism rates amongst ex-offenders in Peterborough. If the program is effective in reducing recidivism rates by at least 7.5%, the government will use cashable savings resulting from reduced prison costs to repay investors.

Since the initial SIB in Peterborough, the concept has expanded exponentially. More than 20 SIBs have been developed around the world, primarily in the UK, US, and Australia. Additionally, the UK government recently committed £40 million to the development of future projects, while in the US, President Obama has committed $500 million to future projects in his most recent budget. At this point, Canada has not yet raised its first SIB, but interest is growing, particularly in Alberta, Ontario, and Atlantic Canada.

The reason Canada has yet to raise a SIB is because collaboration among all of the necessary stakeholders – government officials, social service providers, and private investors – has proven challenging to facilitate. To overcome this challenge, we started Finance for Good, Canada’s first SIB intermediary. In this role, we develop the necessary tools, networks, and processes to bring SIBs to Canada. Since each stakeholder has different interests and concerns, we build customized, actionable plans to prepare each group for future SIBs, as well as a collaborative process that brings everyone together to make the most important decisions. Our process is based on what was used in the UK, tweaked based our knowledge of local interests within Canada.

Some of our ongoing initiatives include:

  • Working with government officials, primarily in Alberta and Nova Scotia, to educate them on SIBs and effective SIB design processes
  • Engaging with service providers and community organizations in varying capacities to help them to develop and track observable metrics to prove the effectiveness of their programs and link their success to economic variables (we’re helping them become “SIB-ready”)
  • Connecting interested investors to potential projects and building a market for SIBs as investment vehicles

Based on our engagement with stakeholders across all sectors in society, we are confident that SIBs will soon be introduced in Canada to support and expand social programs across the country. We are not yet positive which initiatives will be chosen to scale up with a SIB, but we have identified a number of exciting service providers in Alberta with tremendous potential to create positive impacts on the lives of our province’s most vulnerable groups.

A sample of the Alberta programs we believe in are based on:

  • “Housing-first” principles, which combines affordable housing with necessary support services to break the cycle of chronic homelessness
  • Integrated crisis diversion aimed at helping vulnerable individuals reduce police contact and actively directing them towards social services fitting their needs
  • Innovative counseling techniques aimed at reducing time children spend in foster care

Canada is recognized globally for having a strong social system, however, the system is currently challenged by increasing costs and a cycle of reactionary spending. SIBs are one option to overcome these challenges and expand the funds available to social service organizations. So far we are extremely encouraged by the enthusiasm each of our stakeholder groups is showing toward SIBs. We look forward to continuing our work and bringing SIBs to Canada!

If you are interested in hearing more about our work at Finance for Good, we invite you to view our website at www.financeforgood.ca, or reach out to us directly at info@financeforgood.ca.

Social Finance for Calgary

 

Written by Thrive

 

What is the return on your investments? The value of an investment is typically looked at from a purely financial perspective with the social return often overlooked or not considered at all. Social Finance has been around for a number of years, but it is quickly gaining traction as it has the potential to solve some of society’s social and environmental challenges while generating a financial return. Investment options to date have existed for only the for-profit sector. Social finance options offer both for-profits and non-profits access to needed funds and can provide investors with the option to invest in work that improves society and generates a positive financial return.

Continue reading “Social Finance for Calgary” »

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You’ve Heard of Slow Food, Now There’s Slow Money

By Karen Anderson (as originally published in the September/October 2011 issue of City Palate)

Why would anyone want “slow money”? As a culture we’ve been programmed to hope for fast money. Woody Tasch is the author of Inquiries into the Nature of Slow Money – Investing as if Food, Farms and Fertility Mattered. In his book, he poses hard questions, like why modern money markets ask us to take our money away from local businesses to invest it globally. He’s witnessed the impoverished farms and abandoned main streets that the emphasis on global investment has wrought, and he’d like to help turn that around.

Continue reading “You’ve Heard of Slow Food, Now There’s Slow Money” »

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