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2009 Canada to UK Study Tour: Slide Deck Presentation
March 28th – April 2nd 2009
      Key Takeaways
1. Tour Overview

2. Social Finance


3. Public Policy


4. Culture and Enabling Environment


5. Actions
The primary aim of SiG is to encourage effective methods of
addressing social problems on a national scale.

The activities of SiG serve to facilitate the exploration of
structural, institutional and systemic evolution in order to
promote broad system change.




A national collaboration to fast-track Canada’s adoption of
social finance.



Part broker, part incubator, part think-tank, part consultancy,
Volans works globally with entrepreneurs, businesses, investors
and governments to develop and scale innovative solutions to
social and environmental challenges..

Volans is based in London and Singapore. www.volans.com
Culture of Social
                Innovation




Social Finance                    Public Policy




                                Social
Social Enterprise
                           Entrepreneurship
Social        •  An organization or venture (within an organization) that
                      advances a social mission through entrepreneurial,
   Enterprise
                      earned income strategies. ~Social Enterprise Alliance


                   •  Social innovation is a complex process of introducing
                      products, processes or programs that profoundly
     Social           change the basic routines, resource and authority flows
   Innovation         or beliefs of the social system in which they arise. Such
                      successful social innovations have durability and broad
                      impact. ~ Dr. Frances Westley


                   •  An entrepreneur who engages in business seeking
     Social
Entrepreneurship
                      both financial and social return ~ PFC (Philanthropic
                      Foundations Canada)
Key Definitions – Social Finance
     Social Finance is the flow of financial
     capital to human need uses:
                                                                  Charity and
             •    Affordable Housing                               Non-profit
             •    Social Enterprise
             •    Support for working families
             •    Health & Home Care                           Hybrid
             •    Community Development                        Space
             •    Social Economy
             •    Clean Technology
             •    Microfinance                             Business       Government
             •    Fair Trade
             •    Green Building
             •    Education
             •    Bottom of the Pyramid



source: market sector listing adapted from www.xigi.net)
1. Tour Overview

2. Social Finance

3. Public Policy

4. Culture and Enabling Environment

5. Actions
Investment Type                   UK Examples             Canadian Examples
Financial Institutions            Triodos, Charity Bank   Vancity
Financial Investment Product      Social Investment       Jantzi Index
Universe                          Forum, GSI
Social Venture Capital -          Catalyst                Investeco, Renewal 2
business
Social Venture Capital – social   Bridges Ventures,       Resilient Capital
enterprise                        Venturesome
Government Loans                  Future Builders         Fiducie Chantier de
                                                          L’economie Sociale Trust
Non-Government Grants             Unltd.                  Enterprising Non Profits
                                                          (ENP) – BC and ON
Philanthropy                      Esmee Fairbairn         McConnell Foundation
                                                          Vancouver Foundation
                                                          Ontario Trillium
                                                          Foundation,
                                                          Wellesley Institute
    A healthy social finance marketplace contains many different MODELS
                                                                    9
Venturesome’s Spectrum of Venture Capital Investment
                                                           Increasing evidence of
                                                           commercial finance
 HIGH                                                      available
 CHANCE OF     Secured loan
 REPAYMENT

                                                                                Dark grey area show where supply of
               Standby
               Facility                                                               finance is readily available
               Overdraft
                                                                             Light grey area is where there is a need for
                                                                                    more capital and instruments

               Unsecured                                                                                               HIGH
               Loan           LOW RISK                                                                                 RISK
                                                Working        Pre-funding
                                  Hard                                                                       Soft
                                                Capital        Capital                   Working
               Patient            Development                                                                Development
                                                (closed)                                 Capital (open)
                                  Capital                      Fundraising                                   Capital
               Capital

               Quasi-equity


               Equity
                                                           Need for further
 LOW
                                                           supply of capital and
 CHANCE OF
 REPAYMENT     Grant                                       development of
                                                           financial instruments

                    What does Canada’s spectrum look like?
Courtesy of Paul Cheng at Venturesome
Creating Social Finance Solutions
 Paul Cheng - Venturesome
    Venturesome is not a bank, nor a granting organisation - it provides
    underwriting/stand-by facilities, unsecured loans and equity and quasi-equity
                                  3 models of social enterprise
                      1. Profit Generator – goal to get profit and give some (or all) away to charity
                          (Patagonia)

                      2. Trade Off Financial and Social Returns - activity has social impact, but needs to
                           trade off between financial and social impact (ie, The Hoxton)

                      3. Lock-Step – no trade- off between social and financial impact - if one side goes
                          down, the whole organisation does (ie. community wind farms)

  •  Responding to issues in the third sector – charities are undercapitalized with weak balance
     sheets and a ‘donor’ culture rather than an ‘investor’ culture
  •  Provided £12m to 200 organisations, with a default rate of less than 5%
  •  Current fund is £10m with banks, foundations and HNW individual investors
  •  Exploring the ‘negative return’ spectrum



    - 100%                              - 15%                              0%              + 8%
   Grant-makers                                                Capital-protected      Market-rate return

Courtesy of Paul Cheng at Venturesome
                                                                                       11
Social Venture Capital Models
Skye Heller and Antony Ross – Bridges Ventures
          •  Currently running 2 Community Venture Funds (Bridges CDV1 is a
             £40m fund and Bridges CDV2 is a £75m fund) with investments
             focussed on delivering a financial and social return.

          •  Investment focussed on under-invested inner city areas of London

          •  Reports to investors include the social impact as well as the financial
             and economic progress of investments

          •  Exits are flexible – trade sale, float or manager buy-back

          •  November 2008 launched the £4.25m Social Entrepreneurs Fund – a
             charitable trust which invests in scalable social enterprises delivering
             high social impact
Portfolio Company Example – THE GYM
•  No-frills, clean gyms with good equipment, open 24 hr/day
• Located in lower income communities
•  £14.99/month with no contracts
• Social benefit (providing health benefits to lower income communities) and financial
benefit to investors (company is expanding)
                                                                12
The Role of Banks
Whitni Thomas – Triodos Bank Opportunity Fund
           •  Triodos Bank only finances enterprises with which add social,
              environmental and cultural value - using finance and capital
              to fuel social change

           •  €3.5 Bn with operations in 5 EU countries

           •  Involved in the Global Alliance for Banking on Values
              Banking

           •  Triodos’ Opportunity Fund looks to return a profit to LPs
              through investment in social enterprises – providing both
              funding and support as they grow




          The biggest problem is deal flow....
                                                          13
Financing Social Businesses
Rod Schwartz – Catalyst and ClearlySo
             •  Catalyst has 4 areas of activity; Fund Management,
                Information and Research, Advisory Services and Events.

             •  ClearlySo is an online marketplace for social business,
                enterprise and investment.

             •  Similar to mainstream VC – big returns are needed in
                some investments to offset the risk and inevitable losses
                in others

                                 It's a b u
                                             si ness t
                                c o m me                  h at i nte
                                            rc ia l o b               g
                               p rofits)                 je cti ve s rate s
                                            with a s                 (gr
                               e n v i ro n              o c ia l, et o w t h,
                                            m e nt a l               h ic a l o r
                                                       one


   Looking for scale and high return – is this possible in Canada?
                                                                                14
The UK marketplace also contains many social finance
                INTERMEDIARIES
                 Investment         Corporate
                    Bank             Finance
                 Social Finance
                      Ltd                Catalyst



    Research                                          Legal
     Guidestar
                                                    Structures
      Ashoka                 Social                   CIC’s
                            Enterprise
                             Growth


          What systems exist in Canada?
                                                        15
Building & Applying Financial Tools
Toby Eccles and Alastair Ballantyne – Social Finance
Ltd.
             •  Action- research projects focused on applying tools and
                expertise of investment banking and other financial
                sectors to social finance and the third sector

                  o    Social Investment Bank - per recommendations
                       from the Commission on Unclaimed Assets
                       (approx value of Canadian unclaimed assets is
                       $300m)

                  o    Savings/loan Vehicle for those with disabilities (like
                       the RDSP in Canada)

                  o    Social Impact Bond (financial derivative) ie. looking
                       at ways of reducing reoffender rates and calculating
                       the value in social and financial terms

      Lessons from UK: Strategic conversations need to be nonpartisan to
                      remain relevant in the long term
Mission Based Investment
Buzz Schmidt – Guidestar International and F. B. Heron Foundation
                 •  F. B. Heron Foundation is a $350m foundation where the corpus is
                    put into action by deploying the endowment into mission related
                    investment without conceding returns
                 •  Limitations exist in Canada on missions based investing

                 •  Guidestar International is an online service which provides details
                    reports on CSOs (civil society organisations) to improve their visibility
                    to those who support their work

                 •  Create competition for the philanthropic dollar (disappointing to see no
                    other foundations making a play for Buffet’s gift to the Gates
                    Foundation)

                 •  Business model involves partnering with foundations and other grant-
                    makers

                 •  Some of the leg-work completed in Canada and system uploaded with
                    CRA data – would cost $250K/yr to run it



       Guidestar International is looking for Canadian partnerships
                                                                          17
Charitable
                     Foundations
                                             Endowments


                  Mainstream Banks        Private Companies

                                             Federal and
  Financial         Pension Funds             Provincial
Stakeholders                                 Government

                      Insurance             High Net Worth
                      Companies               Individuals

                                           SIO & SRI Mutual
                     Credit Unions              Funds

 How do we engage and connect the individuals in these stakeholder
  groups? What is he role of crowd sourcing and micro-investors?
                                                     18
1. Tour Overview

2. Social Finance

3. Public Policy

4. Culture and Enabling Environment

5. Actions
Government Programs Funding services
Rosemary Mitchell – Futurebuilders
Futurebuilders provides loans and grants to the Third Sector £250m fund
                    •  Set up by Home Office with funds sitting partially in this office
                       and partially in the treasury – commercial agreement with a fund
                       manager


                    +300 investments, mostly healthcare, education and children

                    •  In addition to funding, also provides professional support
                       (finances, contracts...)

                    •  Recently awarded £100m DOH fund contract in consortium with
                       Partnerships UK




      What role should government play in creating social capital
                             markets?                  20
Building Speciality Legal Structures
for Social Enterprises
Stephen Lloyd and Lindsay Driscoll – BWB LLP
         •  Under British Law tax relief exists for charities, but not social
            enterprises
         •  Need new kind of company- Community Interest Company (CIC)
         •  2,628 CICs established in 3.5 years

           Key Elements of CIC legal structures
             •  Founder control of social enterprise
             •  Asset-Lock which prevents privatization
             •  Allows for financing through debt (secured or unsecured) or
                equity (share issuance permitted with dividend cap with a
                maximum annual dividend, 5% above base rate, total 35% net
                distributable profits)
             •  Allows for payment to directors

            Issues that need to be addressed to improve the CIC
             •  Explore tax break effects in to encouraging investment (charities and
                high growth companies receive this consideration)
             •  Only CICs limited by shares can use debt AND equity – those limited by
                guarantee can only use debt financing
What is an appropriate legal structure?
What is CIC?
Community interest companies (CIC) are a type of limited company designed specifically for
those wishing to operate for the benefit of the community rather than for benefit of owners of the
company..
CICs can be limited by shares, or by guarantee, and will have a statutory “Asset Lock” to
prevent the assets and profits being distributed, except as permitted by legislation. This ensures
the assets and profits are retained within the CIC for community purposes, or transferred to
another asset-locked organisation, such as another CIC or charity.
What is an L3C?
 L3C'sare low-profit limited liability corporations, which function via a business modality that is
 a hybrid legal structure combining the financial advantages of the limited liability company,
 an LLC, with the social advantages of a non-profit entity. An L3C is run like a regular business
 and is profitable. However, unlike a for-profit business, the primary focus of the L3C is not to
 make money, but to achieve socially beneficial aims, with profit making as a secondary goal.

 What is the Community Enterprise Act?
 Sector leaders in Canada are exploring the creation of a legal structure, learning from CIC and
 L3C models.

      Each model has its pros and cons...what is right for 22
                                                           Canada?
Financing Structure and Gaps
  Arthur Wood - Ashoka
                          • Foundations, banks and private sector
                            must all be involved in developing and
                            leveraging innovative financing models
                            which bridge the profit and non-profit
                            worlds
      no financial return                              below market return                              market return
                          •  CICs (UK) L3Cs (US) are tools which can
                            stretch the full the investment spectrum
                                          L3C / CIC
       Grants              Recoverable                   Programme                         Social              Mainstream
                             Grants                   Related Investment                 Investment            Investment




         Legal structures can be tools which bridge different
                                           return requirements                                            23
Adapted from Arthur Wood and based on ‘Foundations and Social Investment’ Margaret Bolton 2005 and Bates Wells & Braithwaite
1. Tour Overview

2. Social Finance


3. Public Policy

4. Culture and Enabling Environment


5. Actions
Advocacy and Awareness Programs
Uniting the networks to form a coalition
Jonathan Bland – Social Enterprise Coalition

                   •  Formed in 2003, today 20 staff and £2m
                      turnover

                   Social Enterprise Coalition has 3 key activities
                       1.  Awareness/Promotion: media, events and
                           ambassador program

                        2. Best Practice Research: case studies, ‘how to’
                            guides and training materials

                        3. Inform Policy Agenda: advocating for a strong
                            culture for social enterprise




     IDEA! Evolve current social enterprise networks into a structured
                                 coalition           25
Social Innovation
Public services for public benefit
Rowena Young – NESTA
                     •  NESTA (National Endowment for Science
                        Technology and the Arts) – endowment of £300m
                        focussed on ‘radical’ innovation (rather than
                        ‘incremental’ innovation)


                     •  Looking at the incentives that can motivate
                        radical change – ie challenge grants



                     •  New initiative is ‘The Lab’ which fosters
                        innovation in public service by bringing together
                        people from the public, private and third sectors to
                        collaborate on practical projects

   What programs from NESTA work and should be replicated in Canada?
                       What opportunities exist?
                                                             26
Innovation Foundation
Applied Research and Incubation
Rushanara Ali – The Young Foundation
         •  Focussed on building the field of social innovation –
            systematically encouraging it by developing ideas, working
            with local agencies and developing scale strategies

         •  Programs include:

             •  Health Launchpad – provides funding and support for
                health related innovation (in partnership with NESTA)
             •  Language Line – providing translation services for
                public service
             •  Plan my Care – provides help to the elderly in
                accessing programs designed specially for them




          What programs can be replicated in Canada?
Teaching Social Entrepreneurship
Nick Temple – School for Social Entrepreneurs
                        •  School for Social Entrepreneurs provides training to
                           social entrepreneurs – currently approx 40 students with
                           another 7 schools in the UK

                        •  Focus on small group action-learning and runs once a
                           week for a year with courses including ‘expert witness’,
                           ‘project visit’ and ‘peer        learning’
                        •  Cost is £8500 with bursaries and subsidies available

            Charles Takawira                                          Max Graef
          www.healthcarelink.org                                 www.radioactive.org.uk
              A not-for-profit, community
     investment organisation which recovers and
                                                                    RadioActive provides complete
      redistributes surplus medical supplies and
                                                            technical services, equipment and training to
equipment ,with a dedication to a three-fold mission of
                                                           communities and NGOs around the world, to help
environmental stewardship, job opportunity creation for
                                                          them build and run community radio stations and
  the marginalised, and improving health in Africa   .                    recording studios

Entrepreneurs have the ability to see opportunity and drive change
                                                                                     28
Supporting Entrepreneurs
Encouraging social entrepreneurship
Cliff Prior, Jonathan Jenkins, Michael Norton, Jessica Nugent – Unltd.

•  Unltd. is a support program from social entrepreneurs (not enterprises) and
   founded with a £100m endowment fund from Millennium Awards Trust
•  Works with 1000+ social entrepreneurs and spend £7.5m per year
•  3I’s : INVEST in INDIVIDUALS with IDEA

      Provides 3 different levels of awards:
     •  L1: £500 - £5K – focuses on first steps building entrepreneurial capacity
     •  L2: up to £15K - focuses on freeing up individuals’ time to develop project
     •  L3: up to £20K - focuses on replication and scaling up

•  Partnership with Bridges Ventures connected to investment readiness
•  Youth programs include Unltd. Sport Relief (funding young people to develop
   ideas to reduce social conflict) which work because of freedom & structure, trust
   the people and run by young people for young people
•  Unltd. World –www.unltdworld.com - 9000 members (3/4 active) includes real-
   time data mapping, community building and marketplace


    Unltd. is rolling out globally – is Canada interested in a partnership?
Tim Draimin
       Executive Director,
Social Innovation Generation (SiG)
       tim@sigeneration.ca
         416-673-8171
2009 Canada to UK Study Tour: Slide Deck Presentation
2009 Canada to UK Study Tour: Slide Deck Presentation
2009 Canada to UK Study Tour: Slide Deck Presentation
2009 Canada to UK Study Tour: Slide Deck Presentation

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2009 Canada to UK Study Tour: Slide Deck Presentation

  • 2. March 28th – April 2nd 2009 Key Takeaways
  • 3. 1. Tour Overview 2. Social Finance 3. Public Policy 4. Culture and Enabling Environment 5. Actions
  • 4. The primary aim of SiG is to encourage effective methods of addressing social problems on a national scale. The activities of SiG serve to facilitate the exploration of structural, institutional and systemic evolution in order to promote broad system change. A national collaboration to fast-track Canada’s adoption of social finance. Part broker, part incubator, part think-tank, part consultancy, Volans works globally with entrepreneurs, businesses, investors and governments to develop and scale innovative solutions to social and environmental challenges.. Volans is based in London and Singapore. www.volans.com
  • 5. Culture of Social Innovation Social Finance Public Policy Social Social Enterprise Entrepreneurship
  • 6. Social •  An organization or venture (within an organization) that advances a social mission through entrepreneurial, Enterprise earned income strategies. ~Social Enterprise Alliance •  Social innovation is a complex process of introducing products, processes or programs that profoundly Social change the basic routines, resource and authority flows Innovation or beliefs of the social system in which they arise. Such successful social innovations have durability and broad impact. ~ Dr. Frances Westley •  An entrepreneur who engages in business seeking Social Entrepreneurship both financial and social return ~ PFC (Philanthropic Foundations Canada)
  • 7. Key Definitions – Social Finance Social Finance is the flow of financial capital to human need uses: Charity and •  Affordable Housing Non-profit •  Social Enterprise •  Support for working families •  Health & Home Care Hybrid •  Community Development Space •  Social Economy •  Clean Technology •  Microfinance Business Government •  Fair Trade •  Green Building •  Education •  Bottom of the Pyramid source: market sector listing adapted from www.xigi.net)
  • 8. 1. Tour Overview 2. Social Finance 3. Public Policy 4. Culture and Enabling Environment 5. Actions
  • 9. Investment Type UK Examples Canadian Examples Financial Institutions Triodos, Charity Bank Vancity Financial Investment Product Social Investment Jantzi Index Universe Forum, GSI Social Venture Capital - Catalyst Investeco, Renewal 2 business Social Venture Capital – social Bridges Ventures, Resilient Capital enterprise Venturesome Government Loans Future Builders Fiducie Chantier de L’economie Sociale Trust Non-Government Grants Unltd. Enterprising Non Profits (ENP) – BC and ON Philanthropy Esmee Fairbairn McConnell Foundation Vancouver Foundation Ontario Trillium Foundation, Wellesley Institute A healthy social finance marketplace contains many different MODELS 9
  • 10. Venturesome’s Spectrum of Venture Capital Investment Increasing evidence of commercial finance HIGH available CHANCE OF Secured loan REPAYMENT Dark grey area show where supply of Standby Facility finance is readily available Overdraft Light grey area is where there is a need for more capital and instruments Unsecured HIGH Loan LOW RISK RISK Working Pre-funding Hard Soft Capital Capital Working Patient Development Development (closed) Capital (open) Capital Fundraising Capital Capital Quasi-equity Equity Need for further LOW supply of capital and CHANCE OF REPAYMENT Grant development of financial instruments What does Canada’s spectrum look like? Courtesy of Paul Cheng at Venturesome
  • 11. Creating Social Finance Solutions Paul Cheng - Venturesome Venturesome is not a bank, nor a granting organisation - it provides underwriting/stand-by facilities, unsecured loans and equity and quasi-equity 3 models of social enterprise 1. Profit Generator – goal to get profit and give some (or all) away to charity (Patagonia) 2. Trade Off Financial and Social Returns - activity has social impact, but needs to trade off between financial and social impact (ie, The Hoxton) 3. Lock-Step – no trade- off between social and financial impact - if one side goes down, the whole organisation does (ie. community wind farms) •  Responding to issues in the third sector – charities are undercapitalized with weak balance sheets and a ‘donor’ culture rather than an ‘investor’ culture •  Provided £12m to 200 organisations, with a default rate of less than 5% •  Current fund is £10m with banks, foundations and HNW individual investors •  Exploring the ‘negative return’ spectrum - 100% - 15% 0% + 8% Grant-makers Capital-protected Market-rate return Courtesy of Paul Cheng at Venturesome 11
  • 12. Social Venture Capital Models Skye Heller and Antony Ross – Bridges Ventures •  Currently running 2 Community Venture Funds (Bridges CDV1 is a £40m fund and Bridges CDV2 is a £75m fund) with investments focussed on delivering a financial and social return. •  Investment focussed on under-invested inner city areas of London •  Reports to investors include the social impact as well as the financial and economic progress of investments •  Exits are flexible – trade sale, float or manager buy-back •  November 2008 launched the £4.25m Social Entrepreneurs Fund – a charitable trust which invests in scalable social enterprises delivering high social impact Portfolio Company Example – THE GYM •  No-frills, clean gyms with good equipment, open 24 hr/day • Located in lower income communities •  £14.99/month with no contracts • Social benefit (providing health benefits to lower income communities) and financial benefit to investors (company is expanding) 12
  • 13. The Role of Banks Whitni Thomas – Triodos Bank Opportunity Fund •  Triodos Bank only finances enterprises with which add social, environmental and cultural value - using finance and capital to fuel social change •  €3.5 Bn with operations in 5 EU countries •  Involved in the Global Alliance for Banking on Values Banking •  Triodos’ Opportunity Fund looks to return a profit to LPs through investment in social enterprises – providing both funding and support as they grow The biggest problem is deal flow.... 13
  • 14. Financing Social Businesses Rod Schwartz – Catalyst and ClearlySo •  Catalyst has 4 areas of activity; Fund Management, Information and Research, Advisory Services and Events. •  ClearlySo is an online marketplace for social business, enterprise and investment. •  Similar to mainstream VC – big returns are needed in some investments to offset the risk and inevitable losses in others It's a b u si ness t c o m me h at i nte rc ia l o b g p rofits) je cti ve s rate s with a s (gr e n v i ro n o c ia l, et o w t h, m e nt a l h ic a l o r one Looking for scale and high return – is this possible in Canada? 14
  • 15. The UK marketplace also contains many social finance INTERMEDIARIES Investment Corporate Bank Finance Social Finance Ltd Catalyst Research Legal Guidestar Structures Ashoka Social CIC’s Enterprise Growth What systems exist in Canada? 15
  • 16. Building & Applying Financial Tools Toby Eccles and Alastair Ballantyne – Social Finance Ltd. •  Action- research projects focused on applying tools and expertise of investment banking and other financial sectors to social finance and the third sector o  Social Investment Bank - per recommendations from the Commission on Unclaimed Assets (approx value of Canadian unclaimed assets is $300m) o  Savings/loan Vehicle for those with disabilities (like the RDSP in Canada) o  Social Impact Bond (financial derivative) ie. looking at ways of reducing reoffender rates and calculating the value in social and financial terms Lessons from UK: Strategic conversations need to be nonpartisan to remain relevant in the long term
  • 17. Mission Based Investment Buzz Schmidt – Guidestar International and F. B. Heron Foundation •  F. B. Heron Foundation is a $350m foundation where the corpus is put into action by deploying the endowment into mission related investment without conceding returns •  Limitations exist in Canada on missions based investing •  Guidestar International is an online service which provides details reports on CSOs (civil society organisations) to improve their visibility to those who support their work •  Create competition for the philanthropic dollar (disappointing to see no other foundations making a play for Buffet’s gift to the Gates Foundation) •  Business model involves partnering with foundations and other grant- makers •  Some of the leg-work completed in Canada and system uploaded with CRA data – would cost $250K/yr to run it Guidestar International is looking for Canadian partnerships 17
  • 18. Charitable Foundations Endowments Mainstream Banks Private Companies Federal and Financial Pension Funds Provincial Stakeholders Government Insurance High Net Worth Companies Individuals SIO & SRI Mutual Credit Unions Funds How do we engage and connect the individuals in these stakeholder groups? What is he role of crowd sourcing and micro-investors? 18
  • 19. 1. Tour Overview 2. Social Finance 3. Public Policy 4. Culture and Enabling Environment 5. Actions
  • 20. Government Programs Funding services Rosemary Mitchell – Futurebuilders Futurebuilders provides loans and grants to the Third Sector £250m fund •  Set up by Home Office with funds sitting partially in this office and partially in the treasury – commercial agreement with a fund manager +300 investments, mostly healthcare, education and children •  In addition to funding, also provides professional support (finances, contracts...) •  Recently awarded £100m DOH fund contract in consortium with Partnerships UK What role should government play in creating social capital markets? 20
  • 21. Building Speciality Legal Structures for Social Enterprises Stephen Lloyd and Lindsay Driscoll – BWB LLP •  Under British Law tax relief exists for charities, but not social enterprises •  Need new kind of company- Community Interest Company (CIC) •  2,628 CICs established in 3.5 years Key Elements of CIC legal structures •  Founder control of social enterprise •  Asset-Lock which prevents privatization •  Allows for financing through debt (secured or unsecured) or equity (share issuance permitted with dividend cap with a maximum annual dividend, 5% above base rate, total 35% net distributable profits) •  Allows for payment to directors Issues that need to be addressed to improve the CIC •  Explore tax break effects in to encouraging investment (charities and high growth companies receive this consideration) •  Only CICs limited by shares can use debt AND equity – those limited by guarantee can only use debt financing
  • 22. What is an appropriate legal structure? What is CIC? Community interest companies (CIC) are a type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for benefit of owners of the company.. CICs can be limited by shares, or by guarantee, and will have a statutory “Asset Lock” to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity. What is an L3C? L3C'sare low-profit limited liability corporations, which function via a business modality that is a hybrid legal structure combining the financial advantages of the limited liability company, an LLC, with the social advantages of a non-profit entity. An L3C is run like a regular business and is profitable. However, unlike a for-profit business, the primary focus of the L3C is not to make money, but to achieve socially beneficial aims, with profit making as a secondary goal. What is the Community Enterprise Act? Sector leaders in Canada are exploring the creation of a legal structure, learning from CIC and L3C models. Each model has its pros and cons...what is right for 22 Canada?
  • 23. Financing Structure and Gaps Arthur Wood - Ashoka • Foundations, banks and private sector must all be involved in developing and leveraging innovative financing models which bridge the profit and non-profit worlds no financial return below market return market return •  CICs (UK) L3Cs (US) are tools which can stretch the full the investment spectrum L3C / CIC Grants Recoverable Programme Social Mainstream Grants Related Investment Investment Investment Legal structures can be tools which bridge different return requirements 23 Adapted from Arthur Wood and based on ‘Foundations and Social Investment’ Margaret Bolton 2005 and Bates Wells & Braithwaite
  • 24. 1. Tour Overview 2. Social Finance 3. Public Policy 4. Culture and Enabling Environment 5. Actions
  • 25. Advocacy and Awareness Programs Uniting the networks to form a coalition Jonathan Bland – Social Enterprise Coalition •  Formed in 2003, today 20 staff and £2m turnover Social Enterprise Coalition has 3 key activities 1.  Awareness/Promotion: media, events and ambassador program 2. Best Practice Research: case studies, ‘how to’ guides and training materials 3. Inform Policy Agenda: advocating for a strong culture for social enterprise IDEA! Evolve current social enterprise networks into a structured coalition 25
  • 26. Social Innovation Public services for public benefit Rowena Young – NESTA •  NESTA (National Endowment for Science Technology and the Arts) – endowment of £300m focussed on ‘radical’ innovation (rather than ‘incremental’ innovation) •  Looking at the incentives that can motivate radical change – ie challenge grants •  New initiative is ‘The Lab’ which fosters innovation in public service by bringing together people from the public, private and third sectors to collaborate on practical projects What programs from NESTA work and should be replicated in Canada? What opportunities exist? 26
  • 27. Innovation Foundation Applied Research and Incubation Rushanara Ali – The Young Foundation •  Focussed on building the field of social innovation – systematically encouraging it by developing ideas, working with local agencies and developing scale strategies •  Programs include: •  Health Launchpad – provides funding and support for health related innovation (in partnership with NESTA) •  Language Line – providing translation services for public service •  Plan my Care – provides help to the elderly in accessing programs designed specially for them What programs can be replicated in Canada?
  • 28. Teaching Social Entrepreneurship Nick Temple – School for Social Entrepreneurs •  School for Social Entrepreneurs provides training to social entrepreneurs – currently approx 40 students with another 7 schools in the UK •  Focus on small group action-learning and runs once a week for a year with courses including ‘expert witness’, ‘project visit’ and ‘peer learning’ •  Cost is £8500 with bursaries and subsidies available Charles Takawira Max Graef www.healthcarelink.org www.radioactive.org.uk A not-for-profit, community investment organisation which recovers and RadioActive provides complete redistributes surplus medical supplies and technical services, equipment and training to equipment ,with a dedication to a three-fold mission of communities and NGOs around the world, to help environmental stewardship, job opportunity creation for them build and run community radio stations and the marginalised, and improving health in Africa . recording studios Entrepreneurs have the ability to see opportunity and drive change 28
  • 29. Supporting Entrepreneurs Encouraging social entrepreneurship Cliff Prior, Jonathan Jenkins, Michael Norton, Jessica Nugent – Unltd. •  Unltd. is a support program from social entrepreneurs (not enterprises) and founded with a £100m endowment fund from Millennium Awards Trust •  Works with 1000+ social entrepreneurs and spend £7.5m per year •  3I’s : INVEST in INDIVIDUALS with IDEA Provides 3 different levels of awards: •  L1: £500 - £5K – focuses on first steps building entrepreneurial capacity •  L2: up to £15K - focuses on freeing up individuals’ time to develop project •  L3: up to £20K - focuses on replication and scaling up •  Partnership with Bridges Ventures connected to investment readiness •  Youth programs include Unltd. Sport Relief (funding young people to develop ideas to reduce social conflict) which work because of freedom & structure, trust the people and run by young people for young people •  Unltd. World –www.unltdworld.com - 9000 members (3/4 active) includes real- time data mapping, community building and marketplace Unltd. is rolling out globally – is Canada interested in a partnership?
  • 30. Tim Draimin Executive Director, Social Innovation Generation (SiG) tim@sigeneration.ca 416-673-8171