Social innovation policy in UK

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  • 1. NINO ANTADZE / RICHARD BLICKSTEAD / TIM BRODHEAD / LEE DAVIS / TIM DRAMIN / PATRICIA ELSE / AL ETMANSKI / DON FAIRBAIRN / LOIS FINE / GORDON FLOYD / ALLYSON HEWITT / DR. CARIN HOLROYD / JAQUELINE KOERNER / BAYLA KOLK / SEAN MOORE / JOANNA REYNOLDS / JUDY Key insights from the UK on ROGERS / DONNA THOMSON / DR. FRANCES WESTLEY / enabling Social Innovation ANDREW WHARTON / FAYE WIGHTMAN / SOCIAL with Social Finance and Social Entrepreneurship INNOVATION POLICY TOUR 2009 MARCH 29TH TO APRIL 1ST
  • 2. CONTENTS 03 PURPOSE OF THE TOUR 04 KEY DEFINITIONS 05 SETTING THE CONTEXT: SOCIAL INNOVATION IN CANADA 05 Comparing Canada and the UK 05 The Opportunity 05 The Challenge 05 Early Questions from the Canadian Delegation 06 Profiles of Social Enterprises in Canada 06 Profiles of Social Finance in Canada 09 IN PURSUIT OF ‘AH-HA’ MOMENTS: KEY INSIGHTS FROM THE TOUR 08 Social Finance 08 Public Policy 09 Creating an Enabling Environment 10 SOCIAL FINANCE 10 UK Strategies 11 Lessons for Canada 12 High Level Recommendations 13 PUBLIC POLICY RELATED TO SOCIAL INNOVATION 13 UK Strategies 14 Lessons for Canada 15 High Level Recommendations 16 CREATING A CULTURE AND ENABLING ENVIRONMENT FOR SOCIAL INNOVATION 16 UK Strategies 17 Lessons for Canada 19 High Level Recommendations 20 ACTION PLAN 21 CONCLUDING REMARKS 22 APPENDIX A: Delegate Bios 23 APPENDIX B: Itinerary 25 APPENDIX C: Tour Organizers 26 APPENDIX D: Key Insights from Speakers PAGE 2 Social Innovation Policy Tour 2009
  • 3. PURPOSE OF THE TOUR The UK is known around the world as a country that has energetically embraced the social innovation movement. It contains wide and deep networks of social entrepreneurs, new models of social finance, innovative social enterprises, committed central government support and successful programming which contributes to the creation of a culture and environment where social innovation flourishes. In January 2009, Social Innovation Generation (SiG) National and Causeway set in motion a movement to bring best practices related to social innovation from the UK to Canada by exposing senior Canadian policy-makers, grant-makers and practitioners to their counterparts operating on the other side of the Atlantic. The appetite to learn from the UK is not new. In fact, many conversations and events in Canada over the years have included guests representing UK-based organisations, including Michele Giddens from Bridges Ventures, Arthur Wood from Ashoka, Nick Temple from The School for Social Entrepreneurs, and Rod Schwartz from Catalyst. However never had a group been formally mobilized to visit these friends, as well as meet some new ones. SiG and Causeway sought to change this by coordinating the first Canadian social innovation policy tour to London. Four goals were developed in designing the itinerary for the policy tour; 1. Understand how public policy can be used to stimulate social capital markets 2. Understand how government can create an enabling environment for social enterprise 3. Create a cross-sectoral cohort of people interested in exploring ways to develop an enabling environment for social innovation in Canada. Provide first-hand exposure to some of the UK’s innovative policy, finance and programming initiatives which contribute to its reputation as a global leader in social innovation development. In addition to these goals, three issue areas were identified as being critical pillars to social innovation generation and became the framework for the series of events and presentations in London. Public Policy Social Finance Culture and Enabling Environment With these ambitious goals set, twenty-two delegates from across Canada signed up for the London tour. This visit took place over four days and included a total of twenty-five speakers, three ‘field trips’ and exposure to nearly a dozen innovative entrepreneurs. One of the most important takeaways from this tour was not particular nuggets of information from one speaker or another, but rather a sense of inspiration. The people and organisations who participated in this tour, both form the UK and Canada, represent a global community of caring people who share a commitment to make the world a better and more equitable place. The challenge now is to find ways of unleashing the creative potential of this community to achieve social and environmental objectives. The following report summarizes the key insights from this tour and proposes an initial roadmap with sug- gestions on how Canada might adopt and adapt some of the best practices uncovered in the UK, and apply them to a national social innovation generation strategy. Social Innovation Policy Tour 2009 PAGE 3
  • 4. KEY DEFINITIONS SOCIAL INNOVATION Social Innovation assumes a world where ultimate good in society can be not only imagined, but also cre- ated. It is an initiative, product or process that profoundly changes beliefs, basic routines, resource and authority flows of any social system in the direction of greater resilience. Successful social innovations have durability, impact and scale. SOCIAL FINANCE Social Finance is sustainable finance with a social or environmental goal. It is the flow of financial capital to human need uses: › Affordable Housing › Social Enterprise › Support for working families › Health & Home Care › Community Development › Social Economy › Clean Technology › Microfinance › Fair Trade › Green Building › Education › Bottom of the Pyramid Social Finance aims to leverage existing capital ~ Adapted from www.xigi.net to attract new investment for public benefit. SOCIAL VENTURE CAPITAL Social Venture Capital is a form of venture capital investing that provides capital to businesses deemed socially and environmentally responsible. MaRS Whitepaper Series ‘Social Venture Finance: Enabling Solutions to Complex Social Problems SOCIAL ENTREPRENEURS An entrepreneur who engages in business seeking both financial and social return. PFC (Philanthropic Foundations Canada) SOCIAL ENTERPRISE An organization or venture within an or- ganization that advances a social mission through entrepreneurial, earned income strategies. Social Enterprise Alliance PAGE 4 Social Innovation Policy Tour 2009
  • 5. SETTING THE CONTEXT: SOCIAL INNOVATION IN CANADA COMPARING CANADA AND THE UK Canada UK 2009 Population 31,612,897 61,126,832 2009 Unemployment Rate 8% (April) 7.1% (March) Weekly Earning $820 $858 (2008) THE OPPORTUNITY Canada has the 2nd largest Nonprofit (behind Netherlands) sector with 8.4% of the active population em- ployed by this sector and 2.7% of the population actively volunteering. When looking at core Nonprofits (excluding hospitals, universities and colleges) the statistic remains impressive with 5.5% of the active population being employed by this sector 1. Main sources of income for this sector come from governments, 49% and earned revenue, 35%. Core Nonprofits reflect a similar spectrum with 36% of income coming from government (24% provincial and 9% federal) 43% from earned revenue and 17% from donations and grants, 4% from other sources2 THE CHALLENGE Foundations across Canada are cutting back, suspending Canada’s Charity and Nonprofits Sector disbursements or programs. There is anecdotal evidence that major gifts are in decline. 161,000 registered Charities & Nonprofits 1 US foundations have experienced a drop in $150 billion in 12 million volunteers 2 assets - which equates to nearly as much as they have given out over the last 4 years.3 2 billion hours of volunteer time 3 2 million FTE workers 4 EARLY QUESTIONS FROM THE CANADIAN 11% of the economically active population 5 DELEGATION 8.5% of Canada’s GDP 6 The organisers set the tone for the tour on the first day by 1 Imagine Canada February 2009 asking each delegate to introduce themselves and explain 2 Hall, M, et al. (2005). Highlights of the National Survey of Nonprofit and Voluntary Organizations. Ottawa: what they hoped to achieve over the following four days. This Statistics Canada. was followed by a very high level overview of the landscape 3 Hall, M., et al. (2006). Caring Canadians, Involved Canadians: Highlights from the Canada Survey of Giving, of social innovation in Canada, including recent trends in Volunteering and Participating. Ottawa: Statistics financing, policy models, and examples of effective programs Canada. 4 Imagine Canada: February 2009 and emerging research on the field of social innovation. By 5 Ibid the conclusion of this first day, a few guiding themes emerged 6 Ibid through questions posed by delegates: 1 © Imagine Canada Source: Johns Hopkins Comparative Nonprofit Sector Project, 2000 National Survey of Giving, Volunteering and Participating, National Survey of Nonprofit and Voluntary Organizations 2 © Imagine Canada Source: 2003 National Survey of Nonprofit and Voluntary Organizations. http://www.imaginecanada.ca/files/en/nsnvo/ sector_in_canada_factsheet.pdf 3 Strom, Stephanie. New York Times, ‘Foundations Giving in ’08 Defied Huge Asset Decline’, March 30th, 2009. Social Innovation Policy Tour 2009 PAGE 5
  • 6. › What are the limitations of the charity model? What are the new models that are emerging in response to these limitations? › What factors (social, economic, political) that contributed to the creation of so many UK models of social finance? What makes social finance a principal issue for the government? How do different organisations work together? › How can Canadians scale-up the impact of social enterprises? › What are the key programs that have helped, and continue to contribute, to the vibrant culture of social innovation in the UK? › Who does and does not qualify for ‘social enterprise’ development programs (funding, government supports etc.)? The purpose of this report is to provoke thinking about what Canada might learn from experiments and the success stories found in the UK. We believe that useful new ideas and models will emerge through the process of convening working groups co-evolving a strategy with the support of SiG, Causeway, tour delegates and other stakeholders in the community. PROFILES OF SOCIAL ENTERPRISES IN CANADA Phoenix Print Shop Widely recognized for its success through its printing business providing vocational training to street involved youth. Contracts include Toronto Hydro, PriceWaterhouseCoopers, TD Bank, & Toronto Training Board. BurtonHicks Enterprises Helps families buy affordable homes and establish a financial foundation, providing financing for the purchase and then transitions buyers to a regular bank mortgage within five years. Haween Enterprises Inc Employing new Canadians to create custom manufacturing for retail apparel, promotions and industrial customers. ReStore Habitat for Humanity Retail outlets where quality used and surplus building materials are sold, proceeds support construction of Habitat Homes. PROFILES OF SOCIAL FINANCE IN CANADA Renaissance Quebec Renaissance is a charitable organization aimed at the professional and social reintegration of people ex- cluded from the labour market. It accomplishes its mission, in part, by operating a Montreal-based chain of second hand stores called Fripe-Prix. The stores provide affordable clothing and household items to the community while creating employment opportunities for individuals with significant employment barriers. Renaissance is affiliated with Goodwill International. The goods sold at Fripe-Prix are recovered through a home pick-up system. Donations from individuals and businesses consist mainly of clothing, but the organization also receives furniture, books, toys, small electrical appliances, electronic components, and computers. Renaissance recovers six million pounds of used goods per year. PAGE 6 Social Innovation Policy Tour 2009
  • 7. Social finance organization, Social Capital Partners (SCP), provided the grant and loan financing that allowed Renaissance to launch a new flagship Fripe-Prix store in Montreal. This store is being used to test innovative pricing, merchandising and marketing strategies to improve sales and profitability across the chain. SCP also arranged for Renaissance to receive strategic advice from its partner, The Monitor Group. Edmonton Social Enterprise Fund Launched in February 2008, the Edmonton Social Enterprise Fund (SEF) combines business expertise with flexible financing to help Edmonton nonprofit organizations and cooperatives create or expand strong, sustainable business ventures and affordable housing projects. Loans for housing projects are short term, may range up to $500,000, are designed to bridge to conventional and other sources of financing, and may be used for construction, renovation or the purchase of property. Loans for social enterprise are available for start-up or expansion of social enterprises. Loans for start-up may range up to $50,000 and for expansions up to $150,000. Loans are generally for terms of 5-8 years and may be used to finance operating and equipment needs, building purchases and even the purchase of a franchise. In certain limited circumstances, building purchase loans will be made for a term of up to 10 years. All loans are near prime and repayable. The 5-year goal is to secure $11 million in capital and to invest this capital in loans to social enterprise and housing projects. Repayments will be reinvested in other loans significantly leveraging the lending power of the Fund. Toronto Atmospheric Fund Toronto City Council established the Toronto Atmospheric Fund (TAF) in 1991 to finance Toronto-based initiatives that combat global climate change and improve air quality. TAF provides grants and loans and undertakes special projects to advance its mandate. Working with all sectors of the community, and with city departments and with city departments and agencies, TAF leverages its resources to develop innovative local actions that lead to significant emission reduction results. On an annual basis, TAF has approximately $1.2 million available for grants and special projects. Up to $8 million in financing is currently available for mandate-related loans. RECEPTION: MEETING THE UK SOCIAL ENTREPRENEURS Social Innovation Policy Tour 2009 PAGE 7
  • 8. IN PURSUIT OF ‘AH-HA’ MOMENTS: KEY INSIGHTS FROM THE TOUR SOCIAL FINANCE For a successful social finance market to exist, a renewal of multi-sector partnerships (government, foundations, foundation endowment capital, private sector and the nonprofit sector) is needed. › No one sector can do it all. Government contributions and foundation grants are key stakeholders providing both capital and experience deploying capital. › Relatively untapped stakeholders in Canada are institutional investors (pension plans & mutual funds with socially responsible investment strategies) and private sector partnerships. There are tools and levers that can unleash capital for the social sector. › Legal structure options for social enterprises (Community Interest Companies – CIC) › Venture capital funds and seed capital with appetite and capacity to invest › Intermediary fund managers (Venturesome) › Risk mitigation tools (i.e. guarantees) PUBLIC POLICY A catalyst is required to move the public policy agenda ahead. THE UK SOCIAL INVESTMENT TASKFORCE › Debate around what format this catalyst should In 2000, the Chancellor of the Exchequer announced take (a government department or an endow- the creation of the social investment taskforce. ment) and which level of government should control it (provincial or federal or both). The chair of this taskforce, Sir Ronald Cohen, presented their report in October 2000 which contained 5 key recommendations: Government trends show there is increasing › A Community Investment Tax Credit interest in exploring the role of the third sector in assisting with public service delivery. › A Community Development Venture Fund (Bridges Ventures) › This is an area where the UK has been actively experimenting. › Bank disclosure on lending in under-invested areas › There will be inevitable challenges in a › Greater latitude for investment in Community process where investors, governments and the Development Initiatives social sector will be required to work closely › Support for Community Development Finance together. Institutions › The result will be local economic development These recommendations have been instrumental in and job creation while simultaneously improv- the evolution of UK social finance. Many claim that ing the quality of life for its constituents and the role of a strong champion, Sir Ronald Cohen, was stakeholders. “60,000 British social enterpris- critically important to the success of this taskforce. es turnover some £27bn” Cabinet Office Liam Byne, May 12th, 2009. PAGE 8 Social Innovation Policy Tour 2009
  • 9. There are three types of champions needed to make this catalyst happen – those within the public What’s in a name? sector who can provide leadership, those outside it who can provide practical expertise and advice There is concern that the language around and the elected officials who reflect the interests ‘third sector’ in the UK may be at risk as the of their constituencies when making decisions. It Conservative Party prepares to come to power requires an open and productive dialogue among in 2010. David Cameron has publicly suggested these three champions so that the appropriate that ‘the third sector needs to become the first model can be co-evolved. sector’ – a move many say is indicative of his ambition to drastically alter the existing structure Playing politics means respecting the nature of the of the Office of the Third Sector. game and engaging with all parties to make social innovation an important agenda item outside par- tisan politics. This involves creating shared goals with a focus on increasing opportunities for the sector and focussing on the important role of innovation. CREATING AN ENABLING ENVIRONMENT An engagement strategy can connect different capacity builders and innovators. In the finance sector, this could work by the following; › Enhance Challenge Grants to include a social entrepreneurship element; › Participate in an International collaboration network for foundations and finance sector (i.e. the Rock- efeller Foundation’s Global Impact Investing Network); › Develop skill and capacity building programs for social innovation/social entrepreneurship on the com- munity level and academic institutions (i.e. UnLtd.); › Promote all forms of enterprise education. There are many complex social issues which require social innovations: › young offenders, homelessness, mental health, environment, aboriginal rights, poverty and isolation related challenges. Careful consideration needs to be given to the outcome metrics used in assessing programs that are de- signed to create enabling environments for social innovation. › SiG @ MaRS is involved in the development of these metrics in Canada. WHAT IS HAPPENING AROUND THE WORLD.... SINGAPORE: The Economic Development board (EDB) has selected ‘international nonprofits’ as one of its target industries. http://www.sedb.com/edb/sg/en_uk/index/industry_sectors/nonprofit_organisations/ industry_background.html US: The Obama Administration has set up a $50m Social Innovation Fund focused on nonprofit social enterprises. http://www.whitehouse.gov/blog/What-Is-the-Social-Innovation-Fund Social Innovation Policy Tour 2009 PAGE 9
  • 10. SOCIAL FINANCE UK STRATEGIES Social Finance Models The UK has a wide spectrum of financiers who invest in the community of social enterprises, with varying return expectations. The policy tour provided an introduction to some of the leaders in this space, including. UnLtd. seed capital for entrepreneurs Venturesome loans and equity for charities Catalyst social businesses equity investment Bridges Ventures venture capital with a focus on deprived areas in London and environ- mental businesses Bridges Ventures Social investment in social enterprises which focus on impact rather than Entrepreneurs Fund profit Triodos equity and loan finance for social enterprises Futurebuilders loans and grants funded by government Social Finance Intermediaries There are also a series of intermediaries who play an important role in ensuring the investment process runs smoothly. ClearlySo marketplace creation using web-based tools to help entrepreneurs find what they need to scale Venturesome providing both emergency funding and advisory support to social en- terprises Social Finance researching different tools that can help social investors better access organisations to invest in BWB lawyers specializing in social enterprise and charity Social Finance: Hybrid Legal Corporations Community Interest Companies (CICs) One differentiation between the UK and Canadian context is the existence of Community Interest Compa- nies (CICs). In 2004 a concept emerged for a new legal structure to act as an ‘in-between’ option for those social enterprises looking to create social value and impact. Since its launch in 2005, there has been over 2800 of these Community Interest Companies (CICs) registered in the UK. PAGE 10 Social Innovation Policy Tour 2009
  • 11. There are many supporters of the CIC model, as well as those who see the structure as a first step requiring improvement. The creator of the CIC concepts, Stephen Lloyd, is candid about the advantages and disadvantages. Community Interest Companies (CIC) Pros Cons Founder control of social enterprise Currently no tax break to encourage investment (charities and high growth companies receive this consideration) Asset-Lock which prevents privatization Allows for financing through debt (secured or un- Only CICs limited by shares can use debt secured) or equity (share issuance permitted with AND equity – those limited by guarantee can dividend cap with a maximum annual dividend, 5% only use debt financing above base rate, total 35% net distributable profits) Allows for payment to directors LESSONS FOR CANADA Legal Structures The vibrancy of the UK market is partly driven by the different legal structures available to entrepreneurs. These include for profit businesses, CICs, charities and nonprofits. When introducing new structures, such as the CIC, time needs to be taken upfront to engage with different stakeholders, including end users and investors. FINANCE DEBATE – SPRING 2009 In response to a public call for tender, in early 2009 Futurebuilders was awarded the £100m Social Enterprise Investment Fund (SEIF). This was a competitive tender, with many other UK organisa- tions submitting proposals to manage this massive fund. The decision opened up fierce debate in the funding community. Some questioned the ability of Futurebuilders to adequately manage this fund and argued that it was eroding the public social finance markets rather than developing it. Charles Middleton, managing director of Triodos Bank, and Malcolm Hayday, CEO of Charity Bank, issued a statement which said the Department of Health’s decision was ‘questionable at best’. ‘It provides yet more money to a government funder, which is relatively new to the social finance market, unaccountable to a financial regulator or to wider stakeholders, and which fails to pay a return to investors - factors which raise important questions about how sustainable it really is’ they said.1 1 Gemma Hampson and Chrisanthi Giotis ‘Futurebuilders, Triodos and Charity Bank row escalates’ Social Enterprise Magazine. March 10 2009. http://www.socialenterprisemag.co.uk/sem/news/detail/index.asp?id=866 Social Innovation Policy Tour 2009 PAGE 11
  • 12. Finance Models In addition to legal structures, the UK also has many different finance models for social enterprises and entrepreneurs. Ranging from grants to venture capital, the spectrum of available funding is based on varying return expectations from investors. Compared to the UK market, Canada appears to have gaps in the equity class of investment including venture capital for both social and traditional enterprises. Creating more activity on this side of the spectrum requires an investment appetite by Limited Partners (LPs), which might include governments, banks, pensions funds etc. In addition to the capital, there is also need for experienced professionals to manage these funds, metrics to record and track social impact and attractive exit options. Currently the Canadian market is fortunate to have strong banks that are still able to actively lend. This is a unique global advantage and their engagement could be the bedrock of a strategy to build confidence in the greater market and create a vibrant sector. Big wins in the early days, which banks can help drive, will attract other investors to the social investment space. Intermediaries Financial intermediaries have an important role in creating a smooth investment process. Intermediaries include those who can provide a corporate finance role to assist in the management of the contracts and consortium building. Other organisations, including ClearlySo, are experimenting with ways to help connect social entrepreneurs with the partners they need to develop their ideas. Canadians should be prepared for some of the challenges the UK is facing, most notably around deal flow. Consideration must be given to building out a deep and rich pipeline of investments by creating and enabling culture and environment for social finance to be meaningfully deployed. HIGH LEVEL RECOMMENDATIONS › Pilot Social Finance Models and Intermediaries › Create a new Legal Structure (borrowing from revisions to the CIC model) › Regulatory reform for Foundations, Charitable Tax Law and Nonprofits to remove existing barriers to social entrepreneurship and social innovations PAGE 12 Social Innovation Policy Tour 2009
  • 13. PUBLIC POLICY RELATED TO SOCIAL INNOVATION UK STRATEGIES Office of the Third Sector The Office of the Third Sector (OTS) was created at the centre of government in May 2006. It is a policy office located in central cabinet which leads work across government to support the necessary environment for a thriving third sector (voluntary and community groups, social enterprises, charities, cooperatives and mutuals), enabling the sector to campaign for change, deliver public services, promote social enterprise and strengthen communities. There are both opportunities and challenges in the way the Office of the Third Sector in the UK is structured and organised. Office of the Third Sector Opportunities Challenges High level exposure within government means Perceived to be political. Uncertainty how that its agenda reaches the eyes and ears of very David Cameron will change this office when senior officials elections are held in June 2010 Dedicated minister provides leadership and voice Requires carefully balance policy development both publicly and within government and program delivery Dedicated office provides structure Needs closer proximity to Treasury National Endowment of Science Technology and the Arts (NESTA) In addition to the Office of the Third Sector, The National Endowment for Science, Technology and the Arts (NESTA) is another engagement strategy introduced by the Blair government. It is a £300m endowment dedicated to work across all stages of the innovation process: learning about how innovation works, fund- ing new ventures, building and delivering innovation programs, and disseminating what has been learned, nationally and internationally. “Our vision is bold: social enterprises offer radical new ways of operating for public benefit. By combining strong public service with business acumen, we can open up the possibility of entrepreneurial organisations - highly responsive to customers and with the freedom of the private sector - but which are driven by a commitment to public benefit rather than purely maximising profits to shareholders.” Tony Blair, Forward to Social Enterprise White Paper, 2002 Social Innovation Policy Tour 2009 PAGE 13
  • 14. Associations and Coalitions Lesson from the UK - Find Champions Jonathan Bland from the Social Enterprise Coalition shared his organisations’ tactics to ensure social enterprise stays on the map – engage with politicians! He explained that identifying people early on in their career to take the messaging of social enterprise with them as they progress through the system can lead to strong ties and the creation of internal champions. The UK community is comprised of associations and coalitions which actively lobby the government to support the social enterprise movement. These organisations include the Social Enterprise Coalition and the National Council of Volunteer Organizations (NCVO), both of which have successfully advocated for social policy related action through their outreach and awareness programs. LESSONS FOR CANADA EXISTING SECRETARIATS IN THE PRIVY COUNCIL OFFICE Canada is uniquely different from the UK in many ways. The government organisation into pro- Counsel to the Clerk vincial and federal legislations is an important Intergovernmental Affairs consideration. Both levels have the capacity to engage in the development of relevant policy Social Development Policy initiatives in meaningful and effective ways. Economic and Regional Devp’t Policy Operations Government Departments Orders in Council The Office of the Third Sector (OTS) plays an im- Cabinet Papers portant role in providing exposure to social inno- Priorities and Planning vation and social enterprise at the highest level. The advantages of its current placement include Communications and Consultations access to senior officials and some funding. OTS Macroeconomic Policy has been successfully integrated into the Labour Machinery of Government party political platform, a feat which presents both an opportunity for promotion to the pub- Legislation and House Planning lic, as well challenges in the face of an upcoming Foreign and Defense Policy election. Security and Intelligence At a federal level, the creation of a similar Office International Assessment Staff of the Third Sector might sit in the Privy Council Office, Canada’s equivalent of a Cabinet Office. Senior Personnel and Special Projects As a Secretariat, it would be placed to support Corporate Services and advise the Prime Minister and Cabinet. Each Afghanistan Task Force Secretariat has 3 main roles: to support Cabinet committees, to manage the flow of Cabinet busi- 2010 Olympics and G8 Security ness and to facilitate policy development. At a provincial level, bespoke models need to be developed to fit with each regions existing legislative system. In Ontario, initiatives that connect to social innovation might easily connect to the Ministry of Research and Innovation (MRI). PAGE 14 Social Innovation Policy Tour 2009
  • 15. ‘Right to Request’ The NHS and the Office of the Third Sector encourage and enable staff to start social enterprises through their ‘staff right to request’ program. Employees are encouraged to set up social enterprises to deliver health services – and are guaranteed 3-5 year government contracts as an incentive. National Endowment NESTA is another institutional structure Canada might consider adopting. Despite being an endowment NESTA is charged to act as a neutral third party focused on creating a vibrant and flourishing culture of innovation in the UK. In many ways, it is similar to MaRS in Toronto, a private-public partnership which receives funding from three levels of government as well as private sector support. NESTA commissions research on innovation, deploys funds to support growing ventures and is actively involved in a wide-range of programming. Some of these program ideas, such as The Big Green Challenge, might be adopted by the SiG@MaRS team, however full community stakeholder engagement must be considered very carefully. NESTA has recently launched The Lab, a unit focussed on helping support innovation related to public service delivery. Though still in its infancy, it will be interesting to chart its successes and challenges over the coming years and see how some of their strategies might be applied to the creation of a similar set of activities in Canada. Advocacy Organisations and Associations There are frequent debates around the role of government in allocating public funds to enterprises. Many advocacy organisations and associations, such as the NCVO and Social Enterprise Coalition, have the capacity to diffuse these debates by reporting to the public on the role government is playing in these investments, as well as providing a level of monitoring of how and where capital is being deployed. Though not perfect, these organisations, with the help of the media, are important in their capacity to engage the public by raising flags and celebrating successes. HIGH LEVEL RECOMMENDATIONS Explore opportunities to create an Office of the Third Sector and/or NESTA Support the creation of strong advocacy groups and associations Social Innovation Policy Tour 2009 PAGE 15
  • 16. CREATING A CULTURE AND ENABLING ENVIRONMENT FOR SOCIAL INNOVATION UK STRATEGIES The UK is home to many successful programs designed to enable a culture of social innovation. Some of these organisations have been operating for a long time, while others are new and reflect a growing interest in the community to invest and support in the development of social entrepreneurs and enterprises. There are many different programs directed to different pressure points entrepreneurs face as they develop and scale their enterprises. YOUTH ENGAGEMENT Pipeline Development Make your Mark with a Tenner In the UK there is recognition that one of the most critical things to get right is pipeline growth. In February 2009, 16,000 young people were Without a pipeline of social enterprises, there is given a ‘tenner’ (£10 note), and challenged to no deal-flow for investors to finance and no com- make as much profit and social impact as they munity for the policy makers to work with. Or- could! The results were outstanding. The uses ganisations such as UnLtd. and The School for of these ‘tenners’ ranged from the organisation Social Entrepreneurs have developed innovative of raffles, to fashion shows to spas for teachers. programming which ensures that people who have The winning team, from The National Enterprise ideas are given the necessary support they need to Academy, made a return of £765 from the initial grow their enterprises. ‘tenner’ capital of £50! In addition to these training programs, early pipeline development is also another hot topic as many organisations actively experiment with ways of engaging with youth. UnLtd. runs a series of successful programs aimed at unleashing the talent of young entrepreneurs, and Make Your Mark is a campaign to encourage young people to be enterprising through their high schools. Space-Based Support Entrepreneurs require places to work – one of the services the Hub offers its membership of entrepreneurs. In addition to a desk and access to the basic technology required to set-up and run an organisation, the Hub also offers its members a community where they can work with one another, share contacts and collaborate. The Hub currently has two sites in London and is replicating this successful model around the world. There are other space-based support organisations in the UK including the CAN Mezzanine and the Ethical Property Group. Uniting the Networks Social Enterprise Ambassadors The Social Enterprise Coalition, in partnership with the Office of the Third Sector, has selected 30 social enterprises as ‘Ambassadors’ to the sector. These Ambassadors are passionate and charismatic people who have been selected to represent the movement. They share their powerful stories to inspire others and illustrate the benefits of social enterprise to the wider public. PAGE 16 Social Innovation Policy Tour 2009
  • 17. Another key success in the UK as been the ability to unite many networks into one cohesive coalition. The Social Enterprise Coalition is a national body of social enterprise representing many different national and regional support networks. Its role is to promote the sector to the public and influence politicians across the political spectrum. By engaging with the various networks of enterprises and entrepreneurs, it is able to bring them together to create a united voice loud enough to make policy makers and the public take notice. Knowledge Sharing Valuable research on social innovation is taking place across the UK, driven by some leading institutions including NESTA, The Young Foundation and The Skoll Centre for Social Entrepreneurship at Oxford Uni- versity. The research range encompasses both practical and theoretical studies – all focussed on how this sector might be further developed. The dissemination of this research is generally focussed at a govern- ment audience, however the private sector also underwrites this activity - often where clear lines can be drawn between the findings and the practicalities of their own business model or industry focus in a traditional CSR framework. In addition to traditional research-projects, several innovative knowledge sharing systems exist to help en- trepreneurs learn from one another – including online platforms. Mentorship in the sector is also a regular occurrence, however often times these are developed through informal networks. Partnerships with the Private Sector Many corporations in London have found meaningful ways to engage with social enterprise and entre- preneurs. For example, Accenture has established Accenture Development Partnerships. This is a group within Accenture that provides strategic advice and technical project management support to nonprofit organizations, NGOs, foundations and donor organizations operating in the development sector. LESSONS FOR CANADA Canada should be aware of some of the program models operating in the UK which are successful in pro- moting a culture of innovation and supporting entrepreneurs. This involves building community, both physical and virtual, and networks which, when nurtured properly, will organically expand throughout the country. Teaching Providing different kinds of curriculums for people to learn how to be entrepreneurs can help ensure there is a strong pipeline of ideas. The School for Social Entrepreneurs uses innovative models, including action-learning and peer witness programs – focussing on ‘learning by doing’. Other places to develop an entrepreneurial skill-set include MBA programs where graduate students follow a curriculum involving case studies, research and practical business plan projects. In Canada, there is an opportunity to build on the leading research at the University of Waterloo and pair it with work in business schools (such as Sauder, Queen’s, Rotman, Schulich or specialized graduate pro- grams). This could compliment less purely academic programming which is more focussed on the specific skills needed to run an organisation. Youth Engagement The UK is taking youth engagement very seriously – realizing that if this next generation does not embrace the opportunities offered in the sector there will be fewer innovations in the sector that reach scale. Canada might consider replicating some of the high impact projects which have resonated with the young people in the UK. Social Innovation Policy Tour 2009 PAGE 17
  • 18. A sample of Canadian Universities and Colleges with a social innovation curriculum British Columbia › University of British Columbia, Sauder School of Business: Centre for Sustainability and Social Innovation › Simon Fraser University, Faculty of Business Administration Ontario › Carleton University, Centre for Community Innovation › University of Toronto, Ontario Institute for Studies in Education, Social Economy Centre, Munk Centre › George Brown College, Centre for Business › University of Western Toronto, Richard Ivey School of Business › University of Waterloo, Waterloo Institute on Complexity and Innovation Quebec › Concordia University, Karl Polanyi Institute of Political Economy, School for Community and Public Affairs Advice in Engaging Young People from Young UnLtd. › Create programs for young people by young people – young ambassadors, young panellists and youth leadership bodies. › Provide both freedom and structure – respond to young people’s passions and methods, while pro- viding structure and timelines. › Time bound projects are necessary so young people can fit their projects around school and other commitments. › Trust young people and the wisdom of the crowds › Young people are not the future...they are the TODAY! Awareness The UK has developed strong awareness programs which provide visibility to the sector. Often these attract attention because they involve more than just one organisation, and rather profile larger groups of entrepreneurs and enterprises. Flotillas of activity can only garner so much attention, so concerted effort must be made to unite the various provincial and national networks into a coalition with critical mass and capacity to drive a united movement. In building critical mass, case studies of social entrepreneurs and social enterprises that are easy for the public to understand can be critical tools. With definitions still in debate, nothing provides better clarity than a narrative which is sprinkled with actual examples. The public needs to be interested in these examples in order to understand the important role social entrepreneurs and enterprises play in building strong communities. Storytelling is critical. PAGE 18 Social Innovation Policy Tour 2009
  • 19. UnLtdWorld In March 2008 UnLtd. launched UnLtdWorld – a global online platform for social entrepreneurs. It provides a community where these entrepreneurs can connect with the people, tools and information they need to change the world. As of April 2009 there were over 9,000 active members from over 90 countries around the world, with 15% month on month membership growth. HIGH LEVEL RECOMMENDATIONS › Unite the Networks to build a coalition › Create a spectrum of training programs; engaging young people, developing practical training and involving the academic community › Create spaces; The Hub › Find ways to meaningfully engage private sector partners KINGS CROSS HUB: STEPHEN LLOYD & LINDSAY DRISCOLL ON THE COMMUNITY INTEREST COMPANY Social Innovation Policy Tour 2009 PAGE 19
  • 20. ACTION PLAN Social Finance To develop the social finance sector in Canada, capital is required to invest in social enterprises. Canada can build on experience from regional community loan funds, aboriginal community economic development funds and provincial social enterprise funds in Quebec and Alberta. In addition, smaller grants are available for enterprising nonprofits. BC and Ontario have developed business plans for pilot social venture funds. The challenge is to take this finance capacity to scale by mobilizing existing funding to lever and attract new sources of capital. UK investors following similar strategies include Bridges Ventures, Catalyst and Triodos. In addition to funds, Canada needs to explore different capital market instruments which can facilitate investment. Causeway and other regional actors will begin a research project to better understand social impact bonds, as well social capital funds more broadly. Causeway, in partnership with financial stakeholders (members of the traditional funding community and foundations) will conduct a feasibility study to understand what kind of service infrastructure is required for social finance to grow. The scope of this research project will include an investigation into the best practices for stakeholder, public outreach, and infrastructure operations (back office support through to exit options for social enterprises). A more robust social finance market in Canada could be developed with regulatory and tax reform for foundations, charities and nonprofit organizations. A working group of tour delegates from the funding community will lead two projects; the first to explore revisions to CRA and PRI guidelines for foundations, and the second to look at how tax breaks for social enterprises (and investors in social enterprises) might be applied to make these business models more attractive. Canada will need a separate category of legal structure for social enterprises, following the example of the UK’s CIC model and the US’s L3C model. Another working group of tour delegates, alongside other organisational leadership, will design and advocate for the creation of a new legal structure in Canada – applying the best practices of both the UK and US in creating a model which is unique to Canada and is acceptable at both provincial and federal levels. Public Policy Canada needs a public policy catalyst to promote the importance of social innovation within government and mobilize necessary resources to deliver services to the public. This catalyst might take the form of a government body, a government endowment, or both and will be designed to fit within the Canadian context and work across both provincially and federally. Creating an Enabling Environment There are many programs in the UK which might easily be adapted and adopted to Canada. Feasibility studies for programs focussed on creating an enabling environment for social enterprise need to be mobilised. These initial replication projects might include The School for Social Entrepreneurship, UnLtd. and The Hub. Another step in creating a strong culture of innovation involves building critical mass by uniting the networks and creating a national coalition of organisations supporting social entrepreneurship and enterprise. This may be a role that SiG National is naturally suited to fill. PAGE 20 Social Innovation Policy Tour 2009
  • 21. Overall Outreach All participants of the policy tour will play an important role in engaging stakeholders and developing strategies to see that there are tangible and practical actions. Initial coordination of communications will be managed by Causeway and SiG. This will involve knowing the status of the activity in each of the three focus areas (finance, policy and programming) and sharing regular updates with the larger network. Causeway has agreed to create a series of tools to enable communication between these groups (web- based or otherwise) and will report their findings to the key stakeholders by convening update meetings and to the public using a media strategy. CONCLUDING REMARKS There are complicated systems in play in the process of generating, implementing and delivering social innovation. Despite four long days of events, meetings and presentations the tour concluded with energy and a sense of purpose. There was consensus that though the UK was many steps ahead of Canada in terms of both the availability of finance models, the support of government and the diversity of programming to foster a culture of innovation, there was a sense of optimism around how Canada could take a giant leap forward by adapting and adopting many of the practices. The building blocks exist in Canada – and through the connections and bonds built on the tour – action to explore opportunities to see ideas turned into action is inevitable. The UK presenters have expressed their interest in staying in touch with Canada as it builds its social innovation movement – and have offered to help in the process where they can. Looking forward, it isn’t hard to imagine a day when the entrepreneurs, investors and policy-makers in the UK cross the Atlantic to learn more about the activities in Canada. COMMENTS FROM THE UK ‘Thanks for the opportunity to come and speak’ Whitni Thomas, Triodos ‘A pleasure (to join you) and as ever happy to help in any way’ Arthur Wood, Ashoka ‘I fully enjoyed the meeting and the reception...Please share my details with the Canadians’ Buzz Schmidt, Guidestar International ‘We had a brilliant time and love all you Canadians even more now!’ Ben Ramsden, Pants to Poverty ‘(The delegates) were lively folk and gave intelligent input. Always good to have both of those!’ Cliff Prior, UnLtd. ‘It was lovely to meet your delegates. Let me know if anyone would like to talk to the Chief Executive of Futurebuilders England’ Rosemary Mitchell The findings of this report are based on information available in the spring of 2009. Social Innovation Policy Tour 2009 PAGE 21
  • 22. APPENDIX A: Delegate Bios Nino Antadze PhD candidate, School of Planning, University of Waterloo Richard Blickstead CEO Wellesley Institute Tim Brodhead President and CEO, J.W. McConnell Family Foundation Lee Davis President and CEO Vancity Capital Tim Dramin Executive Director, SiG National Chair, Causeway Social Finance Senior Fellow, Tides Canada Foundation Patricia Else Director, Grant Operations, Ontario Trillium Foundation Al Etmanski President and Co-Founder PLAN Don Fairbairn President, DCF Consulting Lois Fine Director of Finance, YWCA Gordon Floyd Executive Director and CEO, Children’s Mental Health Ontario Allyson Hewitt Director, Social Entrepreneurship, MaRS Director, Social Innovation Generation, SiG@MaRS Dr. Carin Holroyd Department of Political Science, University of Waterloo Jaqueline Koerner Chair, Ecotrust Canada Bayla Kolk Associate Assistant Deputy Minister, Income Security and Social Development (HRSDC) Sean Moore SiG Fellow Joanna Reynolds Program Coordinator, Causeway SiG National Judy Rogers Chair Board of Directors, 2010 Legacies Now Donna Thomson – Tour Observer Special Advisor, PLAN Institute Dr. Frances Westley JW. McConnell Chair in Social Innovation, Director, SiG@Waterloo Andrew Wharton (update required) Special Advisor, Disability Services, BC Faye Wightman President and CEO Vancouver Foundation PAGE 22 Social Innovation Policy Tour 2009
  • 23. APPENDIX B: Itinerary DAY 1 – SUNDAY MARCH 29TH ......................................................................................................................................... 9:00 AM Welcome Tim Brodhead and Tim Draimin 11:00 AM Core Concepts Al Etmanski and Frances Westley 2:00 PM Reflections from The Skoll World Forum Allyson Hewitt 4:00 PM Discussion Summary Frances Westley and Tim Draimin 4:50 PM Agenda Review Tim Draimin 6:00 PM Dinner Rod Schwartz, CEO Catalyst Fund Management and ClearlySo DAY 2 – MONDAY MARCH 30TH ......................................................................................................................................... 9:00 AM Recap: review of key points from Day 1 9:30 AM Social Finance and Social Finance Research Arthur Wood, Ashoka Buzz Schmidt, F.B. Heron Foundation and Guidestar International 11:00 AM Social Enterprise Coalition Jonathan Bland, Social Enterprise Coalition 1:00 PM Social Finance – Private Investment Models Antony Ross and Skye Elliot, Bridges Ventures 2:00 PM TRACK ONE Nick Temple, School for Social Entre- School of Social Entrepreneurs preneurs 2:00 PM TRACK TWO Toby Eccles and Alastair Ballantyne Social Finance Social Finance Ltd. 4:00 PM TRACK TWO Andy Gale, Specialist Advisor, CLG Housing and Homelessness 5:00 PM Discussion Summary Frances Westley and Tim Draimin 6:00 PM Trans-Atlantic Social Innovation Davy’s Wine Bar RECEPTION Social Innovation Policy Tour 2009 PAGE 23
  • 24. DAY 3 – TUESDAY MARCH 31ST ......................................................................................................................................... 9:00 AM Recap: review of key points from Day 2 9:30 AM Social Finance – VENTURESOME Paul Cheng, Investment Manager, Venturesome 11:30 AM Regulatory Environment Stephen Lloyd and Lindsay Driscoll, Charity regulation and new instruments Bates, Wells and Braithwaite LLP 1:00 PM Public Policy – Office of the Third Sector Emma Jones, Senior Policy and Futurebuilders Analyst, Public Sector Partnerships Team Rosemary Mitchell, Futurebuilders Policy Manager 3:30 PM Supporting Social Entrepreneurs – UnLtd. Cliff Prior, Jonathan Jenkins, Jessica Nugent and Michael Norton, UnLtd. 7:00 PM Informal dinner The Duke of Cambridge DAY 4 – WEDNESDAY APRIL 1ST ......................................................................................................................................... 9:00 AM Recap: review of key points from Day 3 9:30 AM Report Planning Tim Brodhead, Tim Draimin and Frances Westley 12:30 PM The Role of Banks Whitni Thomas, Opportunity Fund – Triodos Bank 1:30 PM The Young Foundation - Social Innovation Rushanara Ali, Associate Director, The Young Foundation 2:30 PM The Phoenix Economy John Elkington, Founder of Volans and SustainAbility Maggie Brenneke, Director of Client Services, SustainAbility 4:30 PM Concluding Remarks Tim Draimin 7:00 PM HBS SOCIAL ENTERPRISE EVENT Home House Topic: The Power of Unreasonable People and The Phoenix Economy DAY 5 – THURSDAY APRIL 2ND ......................................................................................................................................... AM Check out and departures PAGE 24 Social Innovation Policy Tour 2009
  • 25. APPENDIX C: Tour Organizers Social Innovation Generation (SIG) is a collaborative partnership between the Montreal-based J.W. McCon- nell Family Foundation, the University of Waterloo, the MaRS Discovery District in Toronto and PLAN Insti- tute in Vancouver. The project is designed to provide practical support for social innovators in cultivating organizations and initiatives across Canada. The primary aim of SiG is to encourage effective methods of addressing persistent social problems on a national scale. The activities of SiG serve to facilitate the ex- ploration of structural, institutional and systemic evolution in order to promote broad social change. Learn more about SiG at http://www.sigeneration.ca CAUSEWAY is a national collaboration to fast-track Canada’s adoption of social finance, ensuring there is a healthy social finance marketplace supported by mainstream financial institutions serving a national constituency of social enterprises, social economy entities, community economic development institutions, cooperatives and the enterprising nonprofit sector. Causeway operates in three spheres: 1) Supporting knowledge development and capacity building 2) Enabling the development of showcase social investment funds serving non-profits 3) Promoting policy changes to enable both the capital providers and capital users CAUSEWAY is supported by SiG@MaRS MaRS drives social and economic prosperity by leading Canada’s innovation mission. We at MaRS envision Canadian communities that are prospering through enhanced employment prospects, the creation and retention of local wealth and an enriched cultural and social environment. To realize this vision, we foster and promote Canadian innovation. CAUSEWAY national collaboration includes: SiG National, Carleton Centre for Community Innovation, PLAN Institute, Igniter, The Canadian Cooperative Association, and University of British Columbia Sauder School of Business, Ashoka Canada. Focusing on the business of social innovation, Volans is part think-tank, part consultancy, part broker and part incubator. We are a for-profit company based in London and Singapore and we work globally with en- trepreneurs, businesses, investors and governments to develop and scale innovative solutions to financial, social and environmental challenges. Volans recently launched its report The Phoenix Economy: 50 Pioneers in the Business of Social Innovation. The report explores the new markets, technologies and business models that are emerging from the ashes of the old economic order. For the Phoenix Economy to take wing, we need people who have the necessary Talent and organizations with the appetite to find future-friendly Solutions. Volans provides and encourages leadership through our Outreach initiatives. Learn more at www.volans.com Social Innovation Policy Tour 2009 PAGE 25
  • 26. APPENDIX D: Key Insights from Speakers PAGE 26 Social Innovation Policy Tour 2009
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  • 34. SOCIAL INNOVATION POLICY TOUR 2009 Key insights from the UK on enabling Social Innovation with Social Finance and Social Entrepreneurship