Social Venture Investment Bank 0312.09 1 1

ON THE FORMATION OF A SOCIAL VENTURE INVESTMENT (SVIB) BANK IN CANADA (Discussion Document) Suresh Fernando March 11, 2009 suresh@strat-insight.com

OBJECTIVES .................................................................................................................................. 3 WHAT IS THE PROBLEM THAT IS BEING SOLVED? .................................................................. 4 WHAT IS A SVIB INVESTMENT BANK?........................................................................................ 5 WHY THE TIMING IS RIGHT FOR AN SVIB.................................................................................. 6 ASSESSING SOCIAL VENTURES: quantitative and qualitative assessments required ................ 6 WHAT IS SROI? – the challenges and opportunity ........................................................................ 7 THE ROLE OF QUANTIFICATION OF SROI: Is it necessary ........................................................ 8 THE GLOBAL SOCIAL VENTURE MARKET: poised for rapid growth!.......................................... 9 THE CANADIAN SOCIAL VENTURE MARKET ........................................................................... 10 INCUBATION AND ENGAGEMENT ............................................................................................. 11 INNOVATIVE FINANCING MECHANISMS: Equity Like Investment Structures........................... 11 CHALLENGES AND OPPORTUNITIES ....................................................................................... 17 STRATEGIC CONSIDERATIONS ................................................................................................ 21 MARKETING ................................................................................................................................. 22 COMPETITION (A Detailed Competitive Analysis Needs To Be Developed ................................ 22 EXECUTION ................................................................................................................................. 23 POTENTIAL REVENUE STREAMS.............................................................................................. 24 REFERENCES (and associated organizations)............................................................................ 26 2

OBJECTIVES My objective in presenting the following is to: 1. Describe a vision for what a Social Venture Investment Bank (henceforth SVIB) might look like. Note that this is not a business plan. 2. Provide an initial framework and set of discussion points to engage those that are interested in the possibility of creating a SVIB in Canada. 3. Provide supporting evidence that larger social and macroeconomic changes/trends are aligned with the formation of a SVIB – the timing is right to do this now! 4. Provide supporting evidence for the need to develop a SVIB in Canada 5. Provide some indication how the integration of a technology strategy that aims to develop a collaborative network between organizations within the SVIB Ecosystem will serve as a differentiator from other competing institutions. 6. Suggest that the opportunities that we are immediately presented with are: a. Active Deal Generation: The institutions currently operating within this space do not bring the proactive approach to opportunity generation that is found at traditional investment banks. There is an opportunity to carve out a market position as an aggressive and innovative boutique in this space. b. Proprietary Research: Develop a proprietary research process that targets social ventures (and possibly charities). This methodology will allow SVIB to: i. Identify quality investment opportunities ii. Assess the viability of existing investments (for foundations etc.) iii. Source financing for social ventures c. Incubation/Engagement: Develop methodologies to assist not-for-profits to develop social venture business units. d. Develop Creative Financing Structures: Identify unique funding structures that provide ‘equity-like’ characteristics. 1 e. Rollout Ecosystem Collaboration Framework: An investment bank that is focused on the social service space needs to develop processes that are uniquely relevant in the social service/venture space. There are certain principled 1 An Organizational Ecosystem consists of the set of relationships that a particular organization naturally works within. This includes, for example, its clients, partners, service providers, volunteers, funding sources etc. 3

reasons why organizations that are not motivated strictly by financial returns can 2 collaborate effectively. i. Furthermore driving collaborative processes will serve to support transactional M&A/integration processes (discussed in due course) 7. Suggest that the long-term success of SVIB is contingent on developing a coordinated strategy that involves all of the above processes. That said, from an execution perspective it will not be possible to start the business process by tackling all of the above simultaneously. WHAT IS THE PROBLEM THAT IS BEING SOLVED? 3 Lack of Intermediaries to Stimulate the Social Investment Sector Lack of Capital for Social Ventures: Traditional funding mechanisms for existing organizations in 4 the social service space are not adequate. 5 Structural Inefficiencies In Social Purpose Capital Markets: Inappropriate Funding Structures/Processes: For example, grant funding that is shorter term - does not fund longer term projects 2 For a more detailed explanation of why this is so, see the Strategic Insight presentation entitled, Ecosystem Collaboration Platform and the document entitled Organizational Ecosystem_02_06_09 (http://docs.google.com/Doc?id=dc4gbgsj_135dqcpp4dv) 3 The Social Purpose Capital Marketplace, Coro Strandberg, January 2007, prepared for the Tides Foundation, p. 8 4 See, for example, Creating a Supportive Environment for BC Social Enterprise, January 2009, Enterprising Non-Profits, http://www.enterprisingnonprofits.ca/summit 5 The Social Purpose Capital Marketplace, Coro Strandberg, January 2007, prepared for the Tides Foundation, p.10 4

Access to Capital is Difficult for Social Service Organizations: Most social service organizations lack resources and expertise to know all of their funding options. The common element in all of these cases is the facts that, in contrast to private sector markets, capital markets players don’t exist that are trying to create transparency and liquidity in the market. There is little attempt being made to actively create this market. 6 Absence of Knowledge/Entrepreneurship Skills • Risk Aversion: Social enterprises and non-profits are not used to taking risks and acting entrepreneurially. • Absence of Technical Skills: business planning, marketing, financial planning etc. WHAT IS A SOCIAL VENTURE INVESTMENT BANK (SVIB)? In many ways, one can think of an SVIB as a traditional investment bank except that the focus is on SROI investments. Due to differences in the dynamics between the social service and for- profit spaces, I will suggest that an SVIB should offer the following services: 1. Investment Banking: connecting investors with investment opportunities. 2. Mergers and Acquisitions: drive collaboration and integration strategies within particular 7 market sectors (Ecosystems) - see BridgeSpan Group report. 3. Research: provide intelligence and investment advice on SROI investments. This would 8 include research on: a. Social Ventures b. Charities c. Not-for-Profits d. SROI projects undertaken by for-profit organizations 4. Origination of Funding Structures: Conceptualize and structure innovative funding mechanisms that will increase the availability of funding options for SROI organizations and projects. 5. Incubation of New Entrants into SROI market space. 9 a. Education 10 b. Best Practices 6 The Non Profit Capital Market in Canada, July 2008, Rebecca Pearson 7 Non Profit M&A: More Than a Tool for Tough Times, February 2009, http://www.bridgespan.org/ 8 The rationale for extending the coverage universe to be widely inclusive is because SVIB wants to focus on actively creating this market. This will involve developing social ventures within organizations that have an existing social, but not financial, focus. This makes it essential that we identify and develop relationships with many socially focused organizations. 9 See Eight Basic Principles for Non-Profit Entrepreneurs, Jerr Boschee 5

6. SROI Compliance Branding: there is a movement to make visible those organizations 11 that operate socially consciously by implementing a standardized branding strategy. 7. Aggressive Approach to Market Development: One difference between an SVIB and existing market participants will be reflected within the culture that will be created as well as the way that business is practiced. The emphasis will not simply be to fulfill existing needs but to actively create new markets in a highly proactive fashion. The commitment to incubate new entrants makes the specific mandate of an SVIB investment bank different from traditional investment banks in that it makes explicit the commitment to build an Ecosystem. WHY THE TIMING IS RIGHT FOR AN SVIB Social Venture Stock Exchange: In process of creating a Social Venture Stock Exchange in Canada. Other markets are in the process of being developed in countries around the world. This signals the emergence of this market. The Environmental Crisis: There is no ambiguity amongst even the most committed to unfettered market processes that we need to address the problem of climate change etc. There is a necessity to formalize processes, within the institutional structures that govern the capital markets, so as to account for social and environmental impacts. Market Meltdown: The recent market meltdown makes it clearer that increased social responsibility through better (and different) corporate governance mechanisms is necessary. ASSESSING SOCIAL VENTURES: quantitative and qualitative assessments required Social Ventures need to assessed on the basis of both financial and social return. Furthermore, social return on investment can be assessed both quantitatively and qualitatively. Quantitative assessments can be done utilizing what are called Social Return on Investment Methodologies, whereas qualitative assessments are typically based upon milestones, benchmarks and monitoring along predetermined timelines. 10 See, for example, What Value Social Enterprise: Understanding the Value of Atira Property Management, Janice Abbott, as well as Success Without Succession, Reflections on the Building & Sustaining of Social Enterprise, Marty Donkervoort. Further case studies produced by BALTA can be found at: http://library.athabascau.ca/drr/view.php?course=sshrc&id=641. It will be necessary to conduct further research to identify specific best practices that can be utilized to develop a methodology to transform not-for-profits into social enterprises, 11 See, for example, the work of BCorporation http://www.bcorporation.net// 6

WHAT IS SROI? – the challenges and opportunity Social Return On Investment (SROI) calculations represent the non-financial return on investment offered by a project. SROI estimation or measurement, although inherently difficult quantify are important for evolution of Social Venture markets for several reasons: Support Investment Process: If effective markets are going to be developed, it will be necessary for investors to make decisions about potential investment opportunities. There needs to be some mechanism whereby investors can discern whether investment A is better than investment B. Support Investee Accountability: Organizations that receive funding need to be held accountable to their investors, and SROI can play a role in this process. SROI Methodologies: SROI calculations were initially introduced in the late 1990’s by REDF (The 12 Roberts Enterprise Development Fund). Since that time much work has been done in trying to determine what SROI methodologies should look like. The New Economy Foundation, for 13 example, has extended the work done by REDF to address some of the potential shortcomings. It should be noted that much needs to be sorted out in this area and it is an area of active research. Melinda Tuan, in her report to the Gates Foundation, analyzes eight different SROI 14 calculation methods, and comes to the following conclusions: 12 http://www.redf.org/. 13 Valuing Social Investment: Valuing What Matters, The New Economics Foundation http://www.neweconomics.org 14 Measuring and/or Estimating Social Value Creation: Insights into Eight Integrated Cost Approaches, prepared for the Bill and Melinda Gates Foundation, Melinda Tuan, December 2008. 7

THE ROLE OF QUANTIFICATION OF SROI: Is it necessary That quantifying social returns is complex should be no surprise, as what is necessary is the synthesis of a number of variables which themselves don’t seem possible to quantify. How, for example, are we to quantify the benefit to humanity of increasing the self-esteem of a volunteer, or increased safety of a child that is placed in a foster home. The question that immediately arises is: is quantification a necessary condition for the development of an effective SROI methodology? Or, to phrase the question differently, how are we to understand what the SROI number represents? In shedding light on what I mean, lets consider the function that traditional accountants and analysts play within the capital markets. Accountants provide us with a snapshot of the business at a particular time. This snapshot is then used by analysts, in conjunction with their analysis tools, forecasting tools and the like in order to produce a view of what the business is likely to look like at some point in the future. If we have learned anything at all over the last year it is that forecasting the financial performance of a company with accuracy is virtually impossible. There are no financial analysts who can provide guarantees about the accuracy of their predictions. All that financial analysts can do is provide reasoned conclusions based upon transparent methodologies. The investor, upon understanding the basis for the calculations as well as trusting the integrity of the advisor makes a decision as to whether or not to invest. Investors rely, therefore, on the rationale and the transparency that underlies the analyst’s process. Investors do not expect analysts to be correct all of the time, only to have a well thought out process that attempts to be correct. I believe that an SVIB can provide this service to its clients using a well-developed SROI methodology, and working in close conjunction with investee organizations. The key to success will be to gain the trust of investors by: 1. Developing a clear SROI methodology that they understand 2. Developing a clear Qualitative Assessment strategy that they understand 3. Implementing the strategies and following up consistently to ensure organizations are compliant with the strategies. 4. Conducting annual reviews to assess the strengths/weaknesses of the methodologies 5. Modifying the methodologies to ensure that they are continually improved. 6. Closely engaging with investee organizations to assist them to grow their enterprises. 8

SROI Research Questions: Questions that need to be answered include: 1. Do different methodologies need to be developed for specific industries/types of organizations? 2. If so, will the infrastructure costs be prohibitive? THE GLOBAL SOCIAL VENTURE MARKET: poised for rapid growth! The Monitor Institute estimates that the overall global market could reach 1% of total managed 15 assets. The also cite the following interesting facts; • As of 2007 there were roughly $3 trillion in assets globally that are invested in SRI 16 businesses • Community investing in the US has a total market value of roughly 26 billion with a compound annual growth rate of 22% between 2001 and 2007. • The global microfinance market is roughly $25 billion and has grown at a compounded annual rate of 44%/year between 2001 and 2006. • Clean technology investments in 2007 alone were $148 billion, up 60% from the previous year. They pose the question: ‘How much larger could (social venture investing) be if leaders join together to build the marketplace infrastructure we outline in this report?’ 15 Investing for Social and Environmental Impact, The Monitor Institute, January 2009, http://www.monitorinstitute.com/impactinvesting/index.html, p. 9 16 The Social Purpose Capital Marketplace, Coro Strandberg, January 2007, prepared for the Tides Foundation 9

They also go on to point out that this industry is poised for rapid growth! 17 THE CANADIAN SOCIAL VENTURE MARKET • The Canadian Social Investment Review reports that as of 2004, there were $65.46 billion invested in SRI investments, up 31% from 2000. • There are over 3000 organizations involved in community economic development that 18 incorporate both economic and social activities. • Canada has the second larger volunteer sector in the world on a proportionate basis: (12%) • There are over 161,000 volunteer and non-profit organizations of which over 83,000 are registered charities. • The volunteer sector employees nearly as many full time equivalents (2.073 million) as the entire manufacturing sector (2.094 million). • In 2003 Canadian charities took in revenues of $70 billion • Quebec is the national leader in social enterprises with over 6200 social economy enterprises employing over 65,000 people, and generating over 4 billion in revenue. • There are over 3000 community economic development organizations in Canada 17 The following data (unless other wise specificed) is taken from The Non Profit Capital Market in Canada, July 2008, Rebecca Pearson 18 The Social Purpose Capital Marketplace, Coro Strandberg, January 2007, prepared for the Tides Foundation, p.10 10

• In 2005 there was 503.61 billion in socially responsible investing of which $809 million was invested in the social sector. • As of December 2005, there were 8852 charities registered with CRA of which 2397 were active grantmaking foundations. • Foundation assets in 2004 totaled $13.9 billion. Grants totaled $1.2 billion. • Federal government funding to the social service sector has decreased over the last several decades. • In 2006, socially responsible lending totaled $1.939 billion. Venture funds with a sustainability focus invested $449 million. INCUBATION AND ENGAGEMENT A critical element in the success of a SVIB will be its capacity to develop the social venture market in Canada. This is necessary because of the lack of experience and expertise that socially focused organizations have in the area of entrepreneurship. It will not be sufficient for SVIB simply to review business plans and allow organizations to operate on their own. A more hands on approach will be needed. It will be necessary to conduct further research in order to determine with more precision what the best engagement model is. Examples of organizations that work closely with clients include: 19 • Adventure Capital Fund 20 • FutureBuilders 21 • Good Capital INNOVATIVE FINANCING MECHANISMS: Equity Like Investment Structures Part of what will be necessary in order to develop this market is to develop innovative financial structures that can satisfy the needs of both investors as well as social enterprises. Furthermore, development of this market may be able to attract investors that would not otherwise invest in social enterprises. The following is an analysis of the landscape in the UK conducted by Bridges Community 22 Ventures . It is likely that the picture in Canada is similar and that there is a gap in the marketplace for ‘equity-like’ capital. 19 http://www.adventurecapitalfund.org.uk/ 20 http://www.futurebuilders-england.org.uk/ 21 http://www.goodcap.net/ 11

The following slides should be self explanatory: 22 http://www.bridgesventures.com/ 12

23 A very intriguing structure has been proposed by Arthur Wood of Ashoka. Rather than try to summarize the features of this structure I present the explanation in full. In short, this structure provides returns that will be acceptable purely to market driven investors and hence could contribute to attracting a class of investors that heretofore avoided the social investment marketplace entirely! 23 Scaling Up The Canadian Social Finance Sector, October 2006, Coro Strandberg for the Tides Foundation 14

As of 2004, Bridges reports that they had only managed to find roughly ten funds in the US that 24 aim to achieve both financial and social returns. This reflects a huge market opportunity. 24 Equity Like Capital For Social Ventures, Bridges Community Ventures, September 2004, p. 29 16

CHALLENGES AND OPPORTUNITIES Although the opportunities are tremendous, there are a number of challenges that will need to be 25 overcome if an SVIB is to be developed. Coro Strandberg cites the following challenges: Addressing the Lack of Awareness and Poor Information: Develop Research Universe and Proprietary Methodology. We believe that the development of a comprehensive research universe as well a proprietary methodology that is effectively communicated to the investment community will substantially increase their information about prospective investments. Further it will provide them with a defined methodology, which will serve to educate them about the risks and rewards associated with the investments. Addressing the Risk and Return Issues: At this stage in the evolution of the industry there likely is not sufficient information to make precise the relationship between risk and return. Furthermore, it is likely the case that even if that information were present, it would act detrimentally to prospective investors as it is unlikely that social investments have performed as well as would be 26 hoped. The strategy moving forward must: 1. Mitigate risk through incubation and engagement with organization with which investments have been made. 2. Mitigate risk through the development of innovative financing structures; ‘equity-like’ investments as profiled previously. 25 Scaling Up The Canadian Social Finance Sector, October 2006, Coro Strandberg for the Tides Foundation, p.13 26 I am assuming this to be the case, but don’t have data to substantiate this hypothesis. 17

Addressing the Issue of High Transaction Costs: Transaction costs are likely high for various reasons: 1. The absence of longer term funding commitments by investors: grant funding for example requires that Executive Directors reapply every year for grants. This is inefficient and resource intensive. 2. Lack of Visibility of Funding Options: Due to the lack of a centralized marketplace or intermediaries that know the investment landscape, organizations seeking capital must expend substantial resources in seek of funds. Not only is this tedious, it increases the operational risk of organizations as it utilizes resources that could be deployed elsewhere. Addressing the Issue of Financial Incentive: Once again, this can be mitigated through the development of innovative financial structures. Initiatives also need to be developed to lobby the government on behalf of the sector. 18

Institutional Systems: The very function of the SVIB is to commence the process of developing the necessary institutional systems; to parallel the institutional systems existent in traditional marketplaces. Information Exchange and Technology Platforms: A market for social ventures is being developed and the formation of an Ecosystem Collaboration Platform will be the first steps in developing the necessary technology infrastructure. Standardization: This problem is not explicitly addressed in this discussion document. Intermediary Capacity: It is the function of the SVIB to fill this gap. Lack of Financial Instruments: It is an explicit part of the SVIB mandate to actively and aggressively pursue the development of innovative funding mechanisms. 19

It seems to me that the above barriers all flow from the nature of the capital sources that are available to social ventures. In virtue of the fact that long term financing is not available, longer term strategies cannot be developed. The constant need to raise money prevents organizations from developing more holistic and sustainable fundraising strategies. Weak balance sheets are not the fault of the organizations; it is function of systemic constraints that make it impossible for them to develop healthy balance sheets. The absence of an entrepreneurial culture is also a function of the constraints within which they have had to operate. To the extent to which it is impossible for organizations to act entrepreneurially, it would be irrational to expect them to invest the resources to hire entrepreneurs or to develop entrepreneurial strategies. If we expect social organizations to develop social ventures, the capital sources and the infrastructure must be in place to support their transition to this way of operating. The antiquated nature of the charity regime is something must be addressed immediately at the policy level, but is beyond the immediate scope of this proposal. 20

STRATEGIC CONSIDERATIONS The Importance of Investment Assessment/Expertise as the Basis for the Formation of Trust With Clients: Since the development of SROI methodologies, and SROI investing in general, is at the inception stage, investors will be heavily reliant on the research and advice of SVIB to make investment decisions. It will be imperative SVIB develop strong relationships of trust with the client. This is especially important since investments decisions will be driven by qualitative factors to a greater extent than they are in traditional markets. This will require that SVIB research be: 1. Based on well researched and well defined SROI metrics 2. SVIB maintains as close contact as possible with investee organizations to ensure that reports accurately reflect the state of affairs of organizations 1. Note that the strategic value of building an incubation component that helps organizations to grow supports the fostering of relationships with these organizations that will support our transparency and risk mitigation efforts on behalf of investors. Community Engagement: This is the sort of initiative that will generate substantial interest from the general population. A strategy will need to be developed to generate grassroots momentum for this idea. Building the Social Venture Ecosystem: The social venture ecosystem can be understood as the various subcategories of the social service space as well as those that they have relationships with. This could include partners, funding sources, volunteer groups etc. that they are also engaged with. For example a search of the Canada Revenue Agency database reveals that there 27 are 180 registered in Toronto that provide services to children. SVIB will differentiate itself from other organizations offering services to social entrepreneurs by actively building the Social Venture Ecosystem. This will be accomplished by fostering and stimulating collaboration amongst ecosystem participants by offering a hosted technology infrastructure that organizations can engage with. There is increasing interest in strategies such 28 as this. Organizations such as Blueprint Research are actively promoting this sort of strategy. SVIB Needs To Be A Social Responsible Organization: SVIB should be structured as a corporation, but the SROI commitment is crystallized by formalizing a commitment to invest a material percentage (say 20%) of net earnings to an investment pool that is utilized to incubate new entrants into the marketplace. 27 http://www.cra-arc.gc.ca/ebci/haip/srch/sec/SrchLogin-e?login=true&searchType=/ 28 See Grantmaker 2.0: Using Technology to Enhance Grantmaker Practices, August 2007, Blueprint Research, Amy Luckey, http://www.blueprintrd.com 21

MARKETING The following represents a few considerations… Crowdsourcing: Since SVIB is a principle driven organization, the objective of which is to advance the cause of social service organizations, it will be able to garner support from a broad constituency that normally would feel no affiliation with an organization that is associated with the financial sector. This would include environmental activists, students etc. SVIB will actively engage with all constituencies in order to build a broad coalition. The function of building this coalition is to support SVIB by actively engaging the community to assist it with identifying potential investment opportunities, volunteering on SVIB client projects etc. Collaborative Technology and Web 2.0 Tools: Central to the marketing strategy will be to actively leverage the utilization of web 2.0 tools to engage the broader public, to mobilize volunteers and to differentiate SVIB from mainstream financial institutions. These sorts of next generation marketing methods are highly cost effective and viral in nature. In relatively short order this sort of strategy should garner media interest which will serve to fuel the overall strategy. Volunteer Engagement: Due to the unique nature of the SVIB project, we will be able to actively recruit volunteers to support the activities of the project. Volunteers will be actively supported by SVIB as we will provide them with visibility within our community (in particular within the 29 technology platform). This could include: • Corporate Governance: leveraging the interests of the public to scrutinize the behaviour of corporations that either follow/don’t follow SVIB principles. Those organizations that support our vision should be noted for this and praised. 30 • Research: Following the lead of CharityIntelligence , it is clear that we will be able to identify volunteers in this area. COMPETITION (A Detailed Competitive Analysis Needs To Be Developed Banks: This includes other traditional credit granting institutions Traditional Investment Banks 29 For a few thoughts on what underlies the motivations of volunteers, see Open System Mobilization Platform, http://docs.google.com/Doc?docid=dc4gbgsj_25hqc96xt3&hl=en, pages 10 – 14. 30 http://www.charityintelligence.ca/ 22

Foundations: EXECUTION The following represents some thoughts on how to move forward with this strategy: The assumption will be that we have secured some initial seed capital that will allow us to have two people dedicated on a full time basis to the project. The most important first step will be to understand the landscape within which we are operating. PHASE I: Understanding the Landscape (Approximately 2 months) 1. Mapping Existing Market Participants • Identifying existing investors and mapping investor profiles • Identifying existing investment opportunities and developing research (Developing a Coverage Universe) 2. Commencing with SVIB Research: • SROI Methodologies • Innovative Financing Structures This will require engaging the leading individuals and organizations from around the world that are working in these area to garner intelligence on best practices etc. PHASE II: Develop Relationships With Ecosystem Partners 1. Revise Documentation: reflect results of Phase I research 2. Engage with Funding Sources, partners, potential investments etc. Develop Open SVIB Collaboration Framework: We will immediately set up an Open Collaboration Process to engage thought leaders that are interested in contributing to the formation of this model. Explore Possibility of an M&A/Integration Strategy within a particular market Ecosystem: As detailed in the BridgeSpan Group paper, Non-Profit M&A, More Than Just a Tool for Tough 31 Times, one strategy that is consistent with the SVIB mission of creating collaborative frameworks between organizations is to explore the possibility of integrating organizations that have similar missions; child services for example. • Potential Drivers: due to the current economic climate, there may be many smaller organizations that will be willing to entertain discussions regarding integration with other organizations. 31 http://www.bridgespan.org/ 23

POTENTIAL REVENUE STREAMS Potential Revenue Streams include: 1. Research a. Prospective candidates b. Portfolio evaluation: 2. ‘Buy-Side’ M&A Mandates: assisting larger organizations to consolidate a market segment. 3. Business and Strategic Planning a. Preparation for investment b. Charities and Not-for-profits seeking to develop social ventures 4. Transaction Fees 5. Ecosystem Platform Subscription 6. SROI Compliance Assessments 24

APPENDICES 32 Appendix A: The Basics of the REDF SROI Methodology: 32 Social Return on Investment: Valuing What Matters, New Economics Foundation http://www.neweconomics.org/gen/, p. 8 25

REFERENCES (and associated organizations) Advancing Social Entrepreneurship: Recommendations for Policy Makers and Government Agencies, Andrew Wolk, RootCause http://www.rootcause.org/ Blended Value Investing, Harold, Spitzer and Emerson Creating Capital Pools to Support Social Enterprise Development in Manitoba, August, 2008, Alex Chernoff Creating a Supportive Environment for BC Social Enterprise, January 2009, Enterprising Non- Profits, http://www.enterprisingnonprofits.ca/summit/ Developing a Social Equity Capital Market 2006, New Economics Foundation, http://www.neweconomics.org Eight Basic Principles of Non-Profit Entrepreneurs, Boschee, Jerr, http://www.socialent.org/ Equity Like Capital For Social Ventures, Bridges Community Ventures, September 2004 Grantmaker 2.0: Using Technology to Enhance Grantmaker Practices, August 2007, Blueprint Research, Amy Luckey http://www.blueprintrd.com Investing for Social and Environmental Impact, January 2009, http://www.monitorinstitute.com/impactinvesting/index.html Measuring and/or Estimating Social Value Creation: Insights into Eight Integrated Cost Approaches, prepared for the Bill and Melinda Gates Foundation, Melinda Tuan, December 2008. Non Profit M&A: More Than a Tool for Tough Times, February 2009 http://www.bridgespan.org/ Organizational Ecosystem, February 2009, Suresh Fernando http://docs.google.com/Doc?id=dc4gbgsj_135dqcpp4dv Preliminary Proposal of the Size and Scope of the Social Economy in British Columbia, July 2008, Jorge Sousa, and Evelyn Hamdon REDF’s Current Approach to SROI http://redf.org REDF Social Impact Report, 2005, http://redf.org Scaling Up The Canadian Social Finance Sector, October 2006, Coro Strandberg for the Tides Foundation Scan of Social Enterprise Financial Support In BC: Background for Social Enterprise Summit Discussions Social Capital and Capacity Building, Discussion Paper prepared for ZCAM, ODP Retreat Social Return on Investment: Valuing What Matters, New Economics Foundation 26

http://www.neweconomics.org/gen/ Success Without Succession, Reflections on the Building & Sustaining of Social Enterprise, Marty Donkervoort The Non Profit Capital Market in Canada, July 2008, Rebecca Pearson The Social Purpose Capital Marketplace, Coro Strandberg, January 2007, prepared for the Tides Foundation What Value Social Enterprise: Understanding the Value of Atira Property Management, Janice Abbott 27

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