This white paper was prepared by MaRS and Ogilvy Renault LLP with the primary objective to increase capital directed at the community for delivering social and/or environmental benefits and two secondary objectives, to simplify and clarify the legal structures and permitted activities by creating a new form of legal vehicle and to provide a brand for social enterprise, social finance and community benefit, thus providing legitimacy and enhanced profile for such activities.
Social Innovation
Wednesday's Federal Government Throne Speech contained a few paragraphs of 'social innovation' language for the first time. This is a welcome political blessing to the social entrepreneurs inside and outside government.
As I read the text I note an acknowledgment of: Canadian communities as incubators of creativity; the importance of working across sectors and boundaries; reducing red tape so that government can support local creativity; and providing expertise to scale up good ideas. Finally, the Throne Speech ends with a commitment to partner with innovative charities and forward thinking businesses to tackle social problems.
Matthew Bishop and Michael Green have recently written an excellent article for the Innovations Journal titled "The Capital Curve for a Better World". The article is part of a volume prepared for the Tech4Society hosted in Hyderabad, India and offers compelling insights on social entrepreneurship and technology from leaders in the field (view the table of contents or full publication). Bishop and Green are also the authors of the recently-penned Philanthrocapitalist Manifesto, which proposes a number of 'radical' policy changes for the UK.
I recommend reading the entire article, as it spans important issues and opportunities around financing social innovation. There are several examples that illustrate the essential building blocks of a social capital market, and how they have - or can - be implemented successfully. A key theme is linking finance to the right kind of organization structure at the right time - and that this requires a more sophisticated understanding of social impact and metrics. On a related note, intermediary organizations can and should play a vital role in connecting demand and supply for social investment, but there is more work needed to build the right incentives and funding to establish and sustain these intermediaries.
Where should non-profits and social enterprises begin when considering their financial options?
First stop is right at home: Is this the right time in the organization’s evolution to be making these considerations at all? It’s worth setting a filter to screen timing on making these considerations at all, and avoid wasting valuable time/energy/resources spinning wheels down the road.
Here are a few suggestions for filter questions: Who is making these considerations? Are they the right person/group to champion this assessment, and do they have the resources to do it properly? Do they have a keen understanding of the organization’s mission, direction & ground level operations? What is the organization’s fitness level in terms of taking on a big new challenge that will affect mission, direction & operations in often unforeseen ways?
At the BC Centre for Social Enterprise, we interface with many community-based organizations seeking to start social enterprises. At our organization’s infancy in 2004, social enterprise was the ‘hammer’ for every ‘nail’ connected to social and environmental inequity. We were so in love with the potential of the social enterprise approach, that we failed to understand its limits. We also failed to recognize that many non-profits and charities are simply not cut out for social enterprise.
One red flag that signals to me that social enterprise is perhaps not the best fit for clients, is when they expect that the enterprise is entitled to be supported entirely by non-repayable grants. My colleague Stacey Crawford undertook some graduate level research that fully shone a spotlight on the tendency for many in the third sector to expect free money for their ventures. In my days as a business counselor for traditional enterprise, this expectation on the part of traditional self-employed folks usually prompted me to suggest that perhaps business wasn’t the best path for them.
Michael Lewkowitz on A Community Enterprise Corp for Ontario? A Response
Mar 09, 2010