Capturing investment capital: A social enterprise strategy – Canadian Government Executive

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April 22, 2014

Capturing investment capital: A social enterprise strategy

Social enterprises are the wave of the future. There are more than 10,000 in Ontario that present a huge opportunity for all parts of the economy on issues that matter to many Ontarians.

Social enterprises are businesses that work to earn a profit while also creating social value. They make money from selling goods and services, but they reinvest their profits back into the business or the local community. Leading this movement in Ontario is a new wave of entrepreneurs who aren’t satisfied with just making a profit; they want their businesses to contribute toward social good.

Niagara Recycling is a great example of a thriving social enterprise. It has been supplying recycling services to households in the Niagara area since 1978, while also providing important job opportunities for people with developmental disabilities. The company reinvests revenue in the Niagara Training and Employment Agency that helps support families with Autism Spectrum Disorder (ASD). Since 1996, Niagara Recycling has contributed approximately $1.25 million to social initiatives, including a summer camp for children with ASD.

There are many compelling reasons for governments to support social enterprises whether they are large national businesses or small community co-ops. Social enterprises help address problems that are too big for government to tackle alone.

Ontario recently launched an ambitious new plan to support the growth of social enterprises. Impact: A Social Enterprise Strategy for Ontario aims to replace piecemeal approaches with an integrated and collaborative approach to help these innovative organizations. The strategy outlines government support for the social enterprise sector for the next three years. It’s built on four key areas which aim to:

  • Connect, coordinate and communicate information to, and about, social entrepreneurs, including exploring new ways to help create “hybrid” corporations that reinvest profits in a social purpose;
  • Build the social enterprise brand by increasing awareness of the sector, using tools like an interactive web portal where social entrepreneurs could meet and connect with investors and access services;
  • Create a vibrant social finance marketplace through various initiatives, including the launch of a new $4 million Social Enterprise Demonstration Fund to support early-stage social enterprises; and
  • Deliver service, support and solutions, like a pilot program to help social enterprises be part of procurements related to the 2015 Pan Am/Parapan Am Games.

The new Office for Social Enterprise in the Ministry of Economic Development, Trade and Employment was created to partner with the private, not-for-profit and public sectors to coordinate and expand the tools available to social entrepreneurs.

When the strategy was introduced, Ontario, in partnership with MaRS, also launched the Social Venture Connexion, an online platform to help connect social impact investors and investment-ready enterprises. Along with several community partners, we also support Catapult, an innovative micro-loan program aimed at social enterprise start-ups. And we recently launched a $4 million Social Enterprise Demonstration Fund to support early-stage social enterprises.

These are critical tools for social enterprises because getting access to financing is a major issue. To help, Ontario is working to remove some of the barriers they face and make available social finance tools that connect them with investors who are interested in achieving a social return on investment, as well as a financial one. These “impact investors” are eager to support businesses that share their commitment to building a better province and a better world.

It’s estimated that in the next 10 years, there will be one trillion dollars in new impact investment capital available globally. The government is working to attract these investments to Ontario’s social enterprise sector.

A major impact investing conference – Impact Ontario – took place at the MaRS Discovery District in Toronto on March 18. The conference involved a partnership between the province, RBC, MaRS and SOCAP, a leading San Francisco-based social capital networking organization.

It was the first time in 13 years that SOCAP held a deal-making conference of this kind outside the United States. It provided a tremendous opportunity to connect our social enterprise sector with social capital investors and impact investors.

 

SIDEBAR
Strategic Support

2007 – SiG@MaRS (Social innovation Generation) champions social innovation in Canada, supported by $6 million of Ontario government funding.

2008 – Ontario Innovation Agenda highlights the growing importance of social innovation and social enterprises.

2008 – Ontario’s Poverty Reduction Strategy initiates support of innovative social ventures to tackle complex policy issues.

2009 – Social Finance Task Force releases a report to help social enterprises adopt innovative business models and enhance public and private support of social finance.

2011 – Ministry of Citizenship and Immigration releases the Partnership Project report, calling for greater government involvement in fostering social innovation and social finance.

2011 – Social Innovation Summit and Wiki creates a path toward a “made in Ontario” social innovation strategy.

2011 – Ontario Centres of Excellence pilots a $1-million social innovation partnership program.

2012 – The Ontario Trillium Foundation starts Future Fund, a program to build social enterprise capacity, focused on needs of young entrepreneurs.

2012 – Ontario establishes a dedicated Office for Social Enterprise.

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