Upload
karim-harji
View
564
Download
0
Tags:
Embed Size (px)
DESCRIPTION
Presentation at OISE - November 21, 2012 • An overview of the state of social finance and impact investing across Canada • An analysis of why Canada is well positioned to become a leader globally • A participatory discussion on the key issues such as: -- The perceived trade-offs between social impact vs. financial return; --- How philanthropy can complement social finance; --- Measurement of social value creation; --- Legislation and public policy; and --- Bridging silos between sectors and organizations.
Citation preview
OISE Social Economy Centre Lunch Box Series
November 21, 2012
Social Finance & Impact Inves7ng
in Canada
Social Finance
• What is it? • Who is involved? • What is the state of the market? • What are the key issues today?
so�cial fi�nance [soh-‐shuhl fi-‐nans, fahy-‐nans], n.; synonym: impact inves.ng • Social finance is an approach to managing money that
delivers a social and/or environmental dividend and an economic return.
• Includes: community invesHng, micro-‐lending, sustainable business and social enterprise lending. Grant making and program-‐related investments also fall under the umbrella of social finance.
• Social finance aims to leverage exisHng capital to aLract new investment for public benefit.
• These approaches to investment and funding share the focus of sHmulaHng posi7ve social and environmental returns for investors and the larger world.
Need for greater innovaHon in solving
social problems
Government can’t afford to solve problems alone
Employee and investor values are shiRing
Emerging number of not-‐for-‐profit and for profit ventures driving social/environmental impact alongside financial return
Why we need it
• $1B revitalizaHon • $450M worth of
market-‐rate bonds • over 6,000 mixed-‐
income housing units
• $5M loan for the First NaHons plant
• generate annual revenue of $1.6M
• power for 1,700 homes
• $250k loan & share issue for expansion
• revenues tripled from $500k to $1.7M
• increased global & local impact; doubled co-‐op membership
Regent Park
Canoe-‐ Creek Hydro
Planet Bean Coffee
What does it look like
6"
SolarShare is a non-profit that allows Ontarians to invest in community based solar energy installation across the Province. By offering bonds backed by larger solar systems hosted on commercial and institutional rooftops. http://bit.ly/toVzT0
Toronto Community Housing Corporation (TCHC) Bond: $1B Regent Park Revitalization with $450M Bond
Centre for Social Innovation (CSI): $1.8M bond issue for the acquisition and re-development of new facility.
http:///watch?v=QgzlmKPoMEo&feature=related
Impact Inves7ng In Canada
Aboriginal Funds, $285.7
Community Futures
Development CorporaHons,
$910.6
Community Loan Funds and Social Venture Capital,
$348.8
Credit Unions, $951.5
FoundaHons, $32
InternaHonal Impact
Investments, $5.6
Quebec -‐ Development
Capital, $1,049.1
Quebec -‐ Solidarity
Finance, $850.5
Assets (Millions), 2010
Source: MaRS CII ; SIO (2010) Impact InvesHng in Canada: A Survey of Assets
Today: $2B 50 Funds: $250M 2011/12: $324M Projected growth: $30B
Established and emerging actors
Who’s involved: spectrum of Canadian investors
Credit Unions Community Loan Funds Social Responsible Investing
Microfinance
Mission-Related Investing Venture Philanthropy Private Equity Funds
!"#$%&'()%*+,-%$'&.
!)/0'11'()+#)&#$"$'1')2%$0+(3+%+,-%$'&.
4)&#$"$'1')2)()/"$(3'&
5(,'%*"6$"(1#761')#11
8(/("#$%&'9#15(,'%**.
$#1"()1'7*#761')#11
:61')#112'9')2+%+"($&'()+(3+"$(3'&1+&(,-%$'&.
;6$#,(00#$,'%*#)&#$"$'1#
!"#$!%&:*#)<#<
=')%),'%*5(,'%*+>0"%,&
Source: Adapted from Charities Aid Foundation (CAF) Venturesome, “Financing Big Society: Why social investment matters” (2010).
'()*+,-./-&0,12+*3-45-6+)78(972(48:;-'+43-<=7+(2(,:-24-#+7>(2(487?-@*:(8,::,:
Social & Financial Return Con7nuum Social finance approaches support a spectrum of organizaHonal business models
Non-‐profit For-‐profit
Who’s Involved?
Cash
Source: F.B. Heron Foundation and Jessica Shortall (2009): “Introduction to Understanding and Accessing Social Investment”
Grant Support
-100% -90% to -10% 0% 1% to 7% 8% +
Private Equity Subordinated
Loans Senior Loans Cash
Lower risk Higher risk Higher risk Lower risk
Guarantees
Fixed Income Public Equity Private Equity
Grants “Soft” Investments Capital-protected investments
Commercial-return investments
Social returns only Very soft debt
Mix of grants and other capital
Willing to lose some money
“Blended return” equity
Soft debt
Willing to take below-market return
Market-rate debt
Equity
Full commercial returns
Social benefit can be a requirement
Supply of Finance
MORE DEBT-LIKE
13 Source: Alex Nicholls and Cathy Pharoah (2008) “The Landscape of Social Investment”, http://www.sbs.ox.ac.uk/centres/skoll/research/Pages/landscapeofsocialinvestment.aspx
Financing Op7ons – Over the Social Entrepreneurship “Life Cycle”
IDEA DEVELOPMENT PROOF OF CONCEPT START-UP SCALE REPLICATION EXIT
GRANTS
MORE EQUITY-LIKE
SOCIAL VENTURE CAPITAL FUNDS
ANGEL INVESTMENT VENTURE CAPITAL
PROGRAM-‐RELATED INVESTMENT/RECOVERABLE GRANTS
FORGIVABLE LOANS
SOCIALLY RESPONSIBLE INVESTMENT FUNDS
BELOW-‐MARKET DEBT
MARKET-‐RATE DEBT
Aligning Supply and Demand
Source: Alex Nicholls and Cathy Pharoah (2008) “The Landscape of Social Investment”, http://www.sbs.ox.ac.uk/centres/skoll/research/Pages/landscapeofsocialinvestment.aspx
Bridging Demand and Supply
Source: Karim Harji and Edward Jackson (2012) “Accelerating Impact: Achievements, Challenges and What’s Next in Building the Impact Investing Industry”, http://www.rockefellerfoundation.org/what-we-do/current-work/harnessing-power-impact-investing/publications
Source: Karim Harji and Edward Jackson (2012) “Accelerating Impact: Achievements, Challenges and What’s Next in Building the Impact Investing Industry”, http://www.rockefellerfoundation.org/what-we-do/current-work/harnessing-power-impact-investing/publications
Source: Social Venture Technology Group, 2008
Type and Maturity of Measurement Methods A Variety of Measurement Approaches
Source: Sara Olsen and Brett Galimidi (2008) “Catalog of Approaches to Impact Measurement”, http://svtgroup.net/wp-content/uploads/2011/09/SROI_approaches.pdf
Source: Social Venture Technology Group, 2008
Where Measurement Approaches are Applied Measurement: Context and Uses Maeer
Source: Sara Olsen and Brett Galimidi (2008) “Catalog of Approaches to Impact Measurement”, http://svtgroup.net/wp-content/uploads/2011/09/SROI_approaches.pdf
Investor percep7ons on tradeoffs between financial and impact returns
What are the key regulatory issues today?
1) Federal: CRA No profit for non-‐profits 2) BC: Community ContribuHon Companies (C3) 3) Ontario: SecuriHes approvals for community bonds
What are the key issues today?
Principles for Community Financing in Ontario
1. Integrity 2. Verifiability 3. Transparency 4. Social Impact 5. Accessibility 6. Accountability 7. No third party solici7ng of investment 8. Trustee administra7on
Challenge ques,on: To regulate or not to regulate social finance security offerings?
Ontario Social Economy Roundtable
Role of philanthropy mission related Inves.ng
5
2
4
18
11
6
1
1
1
0 5 10 15 20
Under $25 k
25 to 50 k
$75 k
$95 to 100 k
$150 to 325 k
$500k to 1M
$1M
$2M
$10M
GRAPH: DEAL SIZE FOR COMMUNITY/ MISSION-RELATED INVESTMENTS FOR SELECTED CANADIAN FOUNDATIONS, 2010
Foundations Recent study reported that nine Can. foundations had $32 million community/mission investing assets in their endowments, representing four (4) per cent of their total assets.
Social Impact Bonds
24 http://socialfinance.ca/guide
What are the key issues today?
• How do these trends apply to you? • What else is missing? • How do we grow the sector? • Task Force recommendaHons?
Joanna Reynolds Program Manager MaRS Centre for Impact InvesHng [email protected]
Karim Harji Co-‐Founder Purpose Capital [email protected]