The Standing Senate Committee on Social Affairs, Science and Technology
Time is right for social finance fund, Senate committee says
May 10, 2018
Ottawa – A federally created and supported social finance fund could help Canada solve some of our country's most challenging issues. It will harness the power of private investment and innovative solutions for the public good, the Senate Committee on Social Affairs, Science and Technology said in a report released Thursday.
The Federal Role in a Social Finance Fund outlines what the government can do to create a new eco-system to percolate social investment. Such a fund will bring together Canada’s private and institutional investors with proven solutions led by charities, not-for-profits and others to amplify their reach and impact. The report makes six recommendations, including a call for the federal government to create a reserve of money to leverage private capital, with arm’s-length management.
Social finance leverages private investment to raise capital for projects with a social purpose, such as affordable housing or infrastructure projects in Indigenous communities. Social finance funds are like traditional investment vehicles except that there is a return on investment and identifiable and measurable returns for society. “Profit with purpose.”
Social finance funds can be used to support the development of such projects or to provide an early commitment to attract other investors, the report says.
Federal government financial contributions could support the array of existing and emerging funds, and leverage funding from other sources. Federal contributions could also attract investors who might join in particular programs that are of interest to the government. Having the Canadian government financially involved would signal stability to other investors.
- A housing project in the First Nations community of Huron-Wendat in Quebec became a social finance success story; a non-profit organization raised $35 million for a housing loan fund.
- Social finance funds work in other countries. In the United Kingdom, Big Society Capital is a $1.1 billion social finance fund that was established in 2012.
“The creation of a social finance fund — with the federal government’s financial backing — has the potential to leverage millions of dollars for private-sector initiatives that provide a social benefit.”
- Senator Art Eggleton, chair of the committee
“Socially conscious Canadians are willing to use their own money to support projects that do well in their community. A social finance fund would be new tool to help raise that vital capital.”
- Senator Chantal Petitclerc, deputy chair of the committee
“A federally backed social finance fund should support projects with defined goals and benchmarks to measure the impact and ensure value for investors and taxpayers.”
- Senator Judith Seidman, deputy chair of the committee
“Social finance is an exciting opportunity to bring new interest and new capital to ideas and solutions to our most pressing needs.”
- Senator Ratna Omidvar, committee member
- Read the report: The Federal Role in a Social Finance Fund
- Follow the committee on social media using the hashtag #SOCI.
- Sign up for the Senate’s eNewsletter.
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