Recommendations
RECOMMENDATION 1:
The committee recommends that the federal government create and contribute to a pan-Canadian social finance fund. The fund would operate at arm’s length from the government, thus not constraining how funds are raised or spent, other than to determine its purpose and to establish accountability mechanisms for its contribution.
RECOMMENDATION 2:
The committee recommends that when assessing where to invest federal money in a social finance fund, the government look for opportunities to leverage funds from other investors.
RECOMMENDATION 3:
The committee recommends that the federal government explore the use of dormant bank accounts as their basis of capital for the social finance fund.
RECOMMENDATION 4:
The committee recommends that a portion of the federal contribution to a social finance fund be targeted to the development of new intermediary funds that will provide economic and social opportunities to traditionally marginalized regions and communities.
RECOMMENDATION 5:
The committee recommends that the fund support institutional capacity building to ensure that organizations are capable of participating in the social finance ecosystem.
RECOMMENDATION 6:
The committee recommends that the federal government make a multi-year commitment to a social finance fund, with fixed amounts flowing periodically over those years, and that the government anticipate a longer time to offer returns.
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.
Quick Facts
- 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.
Quotes
“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
Associated Links
- 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.
For more information, please contact:
Sonia Noreau
Public Relations Officer
Senate of Canada
613-614-1180 | sonia.noreau@sen.parl.gc.ca
Senators who participated in this study
Art Eggleton, P.C.
Lib. - Ontario (Toronto)
Chantal Petitclerc
ISG - Quebec (Grandville)
Judith G. Seidman
C - Quebec (De la Durantaye)
Wanda Thomas Bernard
PSG - Nova Scotia (East Preston)
Fabian Manning
C - Newfoundland and Labrador
Marie-Françoise Mégie
ISG - Quebec (Rougemont)
Jim Munson
PSG - Ontario (Ottawa / Rideau Canal)
Ratna Omidvar
ISG - Ontario
Rose-May Poirier
C - New Brunswick (Saint-Louis-de-Kent)
Nancy Greene Raine
C - British Columbia (Thompson-Okanagan-Kootenay)
Ex officio members: The Honourable Senators:Peter Harder, P.C. (or Diane Bellemare, or Grant Mitchell), Yuen Pau Woo (or Raymonde Saint-Germain), Larry Smith (or Yonah Martin), Joseph Day (or Terry Mercer)
Other Senators who have participated from time to time in the study: The Honourable Senators Linda Frum, Diane Griffin and Percy Mockler