Investing for Impact: Issues and Opportunities for Social Finance in Canada<br />Karim Harji & Tessa Hebb<br />Carleton Ce...
Paper Summary<br /><ul><li>The Canadian social capital market
The trade-offs between risk, return and impact
Canadian investors’ perspective on social finance
Emerging opportunities</li></ul>Definition<br />	Social finance is the deliberate and intentional application  of tools, i...
Elements of a Social Capital Market<br />3<br />
The Social Finance Continuum<br />4<br />Sources: F.B. Heron Foundation and Jessica Shortall (2009) “Introduction to Under...
Investor Perspectives on Social Finance<br /><ul><li>Definitions</li></ul>Need for more clarity and consistency around lan...
Investor Perspectives: Structural Barriers <br />Institutional investors<br /><ul><li>Identifying/structuring deals entail...
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Investing for Impact: Issues and Opportunities for Social Finance in Canada

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Presentation at the ANSER conference in Montreal on June 2, 2010.
Provides an overview of the Canadian social capital market; the trade-offs between risk, return and impact; Canadian investors’ perspectives on social finance; and emerging opportunities.

Published in: Economy & Finance, Business
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Investing for Impact: Issues and Opportunities for Social Finance in Canada

  1. 1. Investing for Impact: Issues and Opportunities for Social Finance in Canada<br />Karim Harji & Tessa Hebb<br />Carleton Centre for Community Innovation<br />Carleton University, Ottawa<br />ANSER Annual Conference<br />Montreal, Quebec<br />2 June, 2010<br />1<br />
  2. 2. Paper Summary<br /><ul><li>The Canadian social capital market
  3. 3. The trade-offs between risk, return and impact
  4. 4. Canadian investors’ perspective on social finance
  5. 5. Emerging opportunities</li></ul>Definition<br /> Social finance is the deliberate and intentional application of tools, instruments, and strategies to enable capital to achieve a social, environmental, and financial (“blended value”) return. <br />2<br />
  6. 6. Elements of a Social Capital Market<br />3<br />
  7. 7. The Social Finance Continuum<br />4<br />Sources: F.B. Heron Foundation and Jessica Shortall (2009) “Introduction to Understanding and Accessing Social Investment”<br />
  8. 8. Investor Perspectives on Social Finance<br /><ul><li>Definitions</li></ul>Need for more clarity and consistency around language<br /><ul><li>Bifurcation between philanthropy and investment</li></ul>“Raising capital for hybrid structures that are not well understood. Most investors think you have to pick one of two boxes. Either the money is for financial investment or it is for charity. They can’t understand an investment that is a hybrid structure...” <br /><ul><li>Deal Making</li></ul>Few specialized intermediaries<br />More successful examples including potential risk/return expectations across varied investors are needed<br />5<br />
  9. 9. Investor Perspectives: Structural Barriers <br />Institutional investors<br /><ul><li>Identifying/structuring deals entail high search/transaction costs
  10. 10. Opportunities must be at scale large enough to justify due diligence
  11. 11. Questions around fiduciary duty and legal obligations</li></ul>Retail investors<br /><ul><li>Greater incentive through the current tax structure (i.e. tax deduction) to make donations rather than below-market investments</li></ul>Common<br /><ul><li>Need for social impact metrics and/or standards that are well-understood, that promote accountability and ease of use</li></ul>6<br />
  12. 12. Emerging Opportunities<br /><ul><li>Engage large institutional investors
  13. 13. Utilize the broader range of foundation assets
  14. 14. Create innovative financial vehicles
  15. 15. Build legislation that fosters an enabling environment
  16. 16. Develop social impact metrics</li></ul>7<br />
  17. 17. Implications<br /><ul><li>Evidence that the supply of impact-oriented capital may not currently be the limiting factor
  18. 18. Governments at all levels have a range of policy instruments to stimulate the flow of investments towards social finance</li></ul>Canadian examples: tax credits (CEDIFs), loan guarantees<br />International models: CICs in the UK; L3Cs in the US<br /><ul><li>Canadian social capital market is not yet calibrating risk and opportunity adequately</li></ul>Need to enhance the sophistication of financial intermediaries<br />8<br />
  19. 19. Thank You!<br />Karim Harji<br />karim@socialfinance.ca<br />Tessa Hebb<br />thebb@attglobal.net<br />www.carleton.ca/3ci<br />www.socialfinance.ca<br /> Presentation available at: www.slideshare.net/kharji<br />9<br />

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