Social Finance

Approach

Social finance is an approach to mobilizing private capital that delivers a social dividend and an economic return to achieve social and environmental goals. It creates opportunities for investors to finance projects that benefit society and for community organizations to access new sources of funds.

Read the Minister's message

As part of our government’s commitment to empowering individuals and communities to better address social challenges, Economic Action Plan 2012 announced we would explore social finance opportunities.

Social finance has enormous potential for unlocking new sources of capital and new ways of thinking to improve social and economic outcomes for Canadians.

Our work to date has been focused on forging new partnerships with not-for-profits, charities, businesses and foundations to examine the barriers to social innovation and how we can better enable social entrepreneurs.

Through the Call for Concepts for Social Finance, I invited organizations and individuals from across the country to help our government take the next step by bringing their best ideas forward. The goal was to help identify future partners and inform how we can shape our existing programs to better support social innovation.

Our government can’t achieve different—and better—outcomes for Canadian taxpayers if we don’t change how we do things.

I am excited about continuing to build on the momentum around social finance, and I’d like to thank those who submitted their concepts. I look forward to learning more about the potential solutions submitted. I hope that together we will identify new ways of making Canada and our communities even stronger.

The Hon. Diane Finley, P.C., M.P.
Minister of Human Resources and Skills Development

Individuals or organizations may invest in:

  • affordable housing projects;
  • social enterprises such as a café that employs youth at risk;
  • social investment funds; and
  • Social Impact Bonds.
Definition of Social Impact Bond (SIB)

There are several models of SIBs. In one model, a SIB is a contract between a government and an external organization, in which the government identifies desired social results and commits to pay the external organization an agreed-upon amount of money if these results are achieved. Typically, investors provide the money to finance an organization to deliver a service. If the agreed-to results are achieved, investors may receive up to 100 percent of the original investment as well as a financial return. If the results are not achieved, the government does not pay.

Government of Canada involvement

In Budget , the Government signaled continued support for social finance initiatives by exploring new instruments such as Social Impact Bonds (SIB).

Social and economic challenges such as homelessness, youth crime, chronic poverty, skills shortages, and persistent unemployment continue to exist in Canada despite the various initiatives taken to address them. New thinking, methods, partnerships and approaches are required to make progress.

Employment and Skills Development Canada (ESDC) is changing how the department supports community organizations to improve economic and social outcomes for Canadians. ESDC is doing this through projects that are piloting innovative funding arrangements, such as:

  • rewarding organizations that deliver pay-for-performance agreements that bring new approaches to addressing social challenges;
  • matching taxpayer dollars with non-government contributions to extend the impact of not-for-profit organizations; and
  • simplifying access to government funding for community organizations.

Call for concepts (closed)

Via the National Call for Concepts for Social Finance, Canadians were asked to submit ideas on how for-profit organizations, not-for-profits, charities, foundations and individuals can fund programs to help families, seniors, and at-risk individuals in Canada. The concepts received may help shape future requests for proposals to launch a social finance initiative and to identify potential partners to pilot a social innovation. ESDC can now examine better ways to address the complex needs of at-risk families, communities and individuals.

A summary report of findings is available online. All submissions are made available in full. It may spark interest among non-government funders and investors to further explore the concepts and pursue individual projects.

If you have any questions about this consultation, please contact us.