Social Enterprise and Social Finance an introduction

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Social Enterprise and Social Financean
introduction
Al Etmanski President, PLAN Partner, Social
Innovation Generation (SiG) Advisor,
Accessibility and Inclusion, 2010 Legacies Now
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Nobel Prize, 2006
Muhammad Yunus
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10 Great Social Entrepreneurs

• St. Marguerite dYouville (Quebec)
• Alphonse Desjardins (Quebec)
• Rev. Moses Coady (Nova Scotia)
• Florence Nightingale (UK)
• Jeroo Billimoria (India, Holland)
• Fabio Rosa (Brazil)
• Dina Abdel Wahab (Egypt)
• Bill Drayton ( US)
• Marc and Craig Kielburger (Ontario)
• Muhammad Yunus (Bangladesh)

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Social Enterprise Multiple Objectives

• Achieve our social mission and program goals
• Earn Revenue
• Increase distribution, market and constituency
• Achieve value and concrete results for our
  partners
• Additional Outcomes
• Accountability
• Discipline and Creativity
• Changing the culture of our organization
• Building a Movement

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Questions

• Is social enterprise letting government off the
  hook?
• Is social enterprise simply another funding
  strategy?
• What is the relationship between social
  enterprise and social movements?

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Mobilizing Our Economic Assets

• To utilize untapped resources for social and
  economic justice
• To change the psychology from victim to agent
  (from scarcity to abundance)
• To address the new worthiness agenda
• To diversify funding base
• To acquire flexible dollars
• To attract new allies and collaborators
• To prepare for predicted fiscal crisis (smaller
  fiscal pie)
• To establish an economic power base

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80 Billion
Registered Disability Savings Plan
Belonging Initiative
NO ONE ALONE FUND
Pooled Investment Fund
160 Billion
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Pooled Investment Fund

• 80 Billion discretionary trusts market/80 RDSP
• Reduce fees/increase rate of return
• Share (actuarial) risk to families of using
  capital from trust
• Offer investment vehicle for small trusts
  (10,000)
• Revenue stream to assist folks w/o families with
  advocacy/trust/guardianship services (No One
  Alone Fund)
• Independent economic base for families to partner
  with government and business

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No One Alone Fund

• Purpose
• To address isolation sustain social networks
• To support folks without families
• To finance independent advocacy
• To finance rebuilding of disability movement
• Potential Sources of Funding
• Percentage of spread from Pooled Trust
• Residual from Discretionary Trusts Disability
  Savings Plan
• 1 tariff on government funded programs and
  services
• Corporate and individual contributions ( Pooled
  Trust)
• New social financing and delivery vehicle

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The Way Forward

• Understanding and mobilizing our financial assets
• Move away from small scale silos to collaboration
  in scale within our sector
• Collaboration with Banks and other Financial
  Institutions Academics Government Foundations
  Corporations

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Context

• Social Sector is under-financed
• Charities and non-profits
• Social and community enterprises
• Limited access to capital
• Declining fiscal pie
• Increased share to health decreased share for
  social
• Current system is highly inefficient
• Cost of capital allocation 20-50 versus 2-5
  (donors 50 cents on dollar)
• Grants - efficiency rate of minus 100 (no rate of
  return) versus bank efficiency rate of plus 5
• New Worthiness Agenda

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Government Fiscal Pie today
Health expenditures
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Demographic Pressure

• 2005 44 children and seniors for every 100
  Canadians of working age
• 2030 61 children and seniors for every 100
  Canadians of working age
• In BC by 2025 more people over 65 than under 15
• If current trends continue health care costs will
  account for more than 70 of BC budget by 2017

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Declining Fiscal Pie 15 years from now
Health expenditures
Environment
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We are not alone latest developments

• Causeway Canadian roundtable
• Great Bear Rainforest
• Vancouver Homelessness Fund
• UK Community Interest Companies
• US Low profit Limited Liability Companies
  (L3Cs)
• Muhammad Yunus (micro credit pioneer) Nobel Peace
  Prize

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Latest Developments - continued

• Deutsche Bank with International Agency for
  Prevention of Blindness - 20 Million investment
  fund to finance eye care hospitals in developing
  countries with near market rates of return
• IBM - 1 Billion revenue on accessibility
  initiative
• Ashoka is tracking 19 social finance deals
  based on a high impact social innovation
  totalling 6.5 Billion
• Britain 55,000 business/social hybrid ventures

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Emerging Sector Convergence Growth of Hybrid
Universe
GOVERNMENT
BUSINESS
Hybrid Space
CHARITIES NON-PROFITS
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Business/Social Continuum
Adapted from John Kingston, Venturesome
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Social Entrepreneurs need social financing

• Expansion of citizen sector organizations
  particularly the emergence of social
  entrepreneurship
• requires a modern competitive social financial
  services industry.
• - Bill Drayton

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Social Finance - definition

• Leveraging multiple sources of financing to
  achieve long term, accountable social impact and
  economic return

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The Social Finance Prism
Grants
Donations
E X I S T I N G S O U R C E S
Foundations
Social impact/ Economic return
In-kind
Financial institutions
N E W S O U R C E S
Business investment
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Characteristics of Social Finance Deals

• Multi sectoral
• Collaborative
• Blended Value
• Amplification/leveraging effect
• Attracted to scalable innovation

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Were Ready!

• Annual income in the Canadian non profit sector
  is 120 Billion, 8 of GDP
• 49 is revenue from government
• 35 is already entrepreneurial earned income,
  43if hospitals and universities are excluded
• Less than 10 is donation income.

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The Abundance Universe
Disability economy
Skilled disability workforce
Family wealth
Social supports
Consumer market
Natural/family supports
Strategic philanthropy
Disability innovation expertise
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Social FinancingA galaxy of resources
Disability market (consumers and families)
Foundations
Government (grants tax regulation-
procurement )
Social investors
Donations
Business investment
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Discussion Questions

• What financial assets does your constituency have
  that you could lever for change?
• What are the existing flows of money you can tap
  into to achieve your social and economic justice
  agenda?
• What knowledge would be useful to help you engage
  more effectively in social finance?

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Resources

• http//causeway.wikispaces.com Causeway
  resources
• www.ashoka.ca Canadian site of original social
  enterprise organization
• www.tidescanada.org Tides Canada host, social
  finance resources
• www.vancitycapital.com Vancity Capital
  Corporation
• www.changemakers.net web based social enterprise
  competition
• www.cedworks.com Centre for Community Enterprise
• www.socialenterprisemag.co.uk Social Enterprise
  Magazine
• www.se-alliance.org Social Enterprise alliance
• www.svn.org Social Ventures Network new
  philanthropy
• www.socialcapitalpartners.ca good resources and
  links
• www.socialedge.org e-zine on social enterprise
  and innovation
• www.blendedvalue.org blending social/economic/envi
  ronmental value
• www.venturesome.org UK social financing resource
• www.pbs.org/opb/thenewheroes PBS documentary on
  social enterprise
• www.wid.org/equity disability and asset building
• www.sedi.org Canadas expert on asset building