Hybrid Structures:

Raising Community

Capital

Social Finance Forum

November 18, 2008

Presented by Brian Iler

Structuring Social Enterprise

Choice of structure will vary – in part - with

the intended source of capital:

!!from wealthy individuals with a social

conscience? CIC an interesting option

!!from PRIs - L3C may be suited

!!from the community served – often the

choice will be a co-operative –the original

“hybrid”

Co-operatives

!! Some co-operatives are primarily social, or even charitable

!! Others operate closer to the business end of continuum

!! All co-operatives are a hybrid of social and business objectives – the difference is in the weighting

Characteristics

Co-operatives:

!! Are based in the community served

!! Are democratically controlled

!! Primarily draw on their community’s

financial resources for capital

!! Have a wide range of available

investment vehicles

Raising Community Investment

Capital

Two issues:

!!Capital campaign must be cost-effective

and reasonably efficient

!!Vulnerable potential investors need

protection

For those who are familiar with the social

enterprise, usually no regulation.

For those who aren’t – some form of risk

disclosure is indicated – and required

Ontario’s Unique Co-op

“Offering Statement” Regime

Where

1.! exemptions not available, or

2.! the marketing of co-op securities would be

enhanced by a government approved

disclosure document,

an Offering Statement is prepared and approved

(“receipted”) by government.

"! “Full true and plain disclosure of all material

facts”

Does an Offering Statement

help Raise Community

Capital?

Yes.

!! Evidence of viable business plan

!! Government review gives investors

comfort

!! Clear statement of risks up front provides

protection in the event losses incurred

Available for Non-profits?

Not yet.

!! Some non-profits are exempt from any

regulation

!! Ontario Non-profit Network has

proposed the co-op offering statement

regime for Ontario’s new non-profit law