The document discusses the Social Innovation Generation (SIG) initiative aimed at promoting effective methods for addressing social issues through collaboration and innovation. It highlights key components of social finance, various models of social enterprises, and the role of different stakeholders including governments and financial institutions in supporting social entrepreneurship. Furthermore, it assesses the current landscape for social enterprise and finance, identifying gaps and opportunities for development in Canada.

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