Inclusive innovation: New ideas and new partnerships for stronger communities

It’s time for the Government of Canada to invest in social innovation and social finance

Governments all around the world, from the United Kingdom to South Korea, are harnessing this energy to move the needle on complex social, economic and environmental problems that matter to their citizens. They are investing in social innovation — ideas that, once adopted, help communities respond to a challenge or realize their aspirations more effectively than before. They are accelerating the growth of social finance — the practice of making investments to create social or environmental impact as well as financial returns — to unlock the private and philanthropic capital needed to tackle pressing challenges.

The federal government can enable a similar shift in Canada using the levers at its disposal. Each year, it delivers over $40 billion in grants and contributions and purchases almost $20 billion in goods and services. It also establishes the legal and regulatory environment in which charities, non-profit organizations and many businesses operate. It is time for Canada to deploy these levers to grow social innovation and social finance across its communities, or risk falling behind.

In 2017, the Government of Canada appointed a Co-Creation Steering Group to guide the development of a Canadian Social Innovation and Social Finance Strategy. Today, following a year-long engagement process with Canadians, we present our recommendations for the Government’s consideration.

Our vision is for a better future for Canada where healthy and sustainable communities thrive; where individuals, especially those in vulnerable circumstances, have access to good jobs, and to safe, affordable housing; a future characterized by reconciliation with Indigenous peoples, dynamic official language minority communities, vibrant diversity, and social and economic inclusion. We believe that this future is within our reach, and that the Government of Canada can hasten its arrival by implementing the recommendations contained in this Strategy.

Only big picture thinking will open the space needed for social innovation

From coast to coast to coast, individuals and organizations across all sectors of society are forming networks of relationships, or ecosystems, where they work together to make their communities more sustainable and inclusive places through social innovation and social finance. We use the term social purpose organizations to refer to the diverse range of organizations engaged in these ecosystems, including charities, non-profit organizations, co-operatives, and private businesses advancing a social or environmental mission.

We believe the Government has a critical role to play in supporting these ecosystems by addressing key gaps that arise across six interconnected areas:

1. Skills and capacity to equip social purpose organizations with the knowledge and resources to adopt social innovation and social finance approaches;
2. Funding and capital opportunities so that social purpose organizations have the financial resources to develop, test, adopt, and grow innovative solutions to social and environmental problems;
3. Market access for social purpose organizations to be able to find buyers for their goods and services;
4. An enabling policy and regulatory environment that creates the conditions for social innovation, social finance and social purpose organizations to flourish;
5. Evidence and knowledge sharing to enable social purpose organizations and funders to work together based on what works, develop better goods and services, scale their impact and evaluate progress; and
6. Awareness and mobilization efforts to spur interest and build support for the growth of social innovation and social finance approaches.

This report makes 12 recommendations for the Government to help unlock the innovative spirit of Canadians.

A Strategy that delivers results for Canadians

When acted upon together, the recommendations will result in real progress toward the Sustainable Development Goals — the set of 17 targets which our country has committed to under the United Nations’ 2030 Agenda for Sustainable Development.

The experience of other countries demonstrates the progress that is possible. In the United States, a study found that 300 social finance intermediaries alone created 63,000 permanent jobs, developed or preserved almost 160,000 units of affordable rental housing, and created almost 32,000 child care spaces for people with low incomes in vulnerable circumstances over 10 years.^{Footnote 1} The United Kingdom's £400 million investment into social finance leveraged over £666 million in private and philanthropic capital, and led to over £1.1 billion in capital being made available to social purpose organizations working to improve outcomes in areas like youth employment, renewable energy, and refugee resettlement.^{Footnote 2}

This is what increased capacity for social innovation and social finance would deliver: new tools, approaches and resources mobilized to make progress on persistent challenges facing communities.

While the way forward is clear, the journey will be challenging

The way in which these recommendations are implemented is as important as their content.

In implementing the Strategy, the Government of Canada must leverage the work that is already taking place across all sectors and regions in Canada. Different groupings, including the co-operative, social economy, social enterprise and community economic development movements, are key drivers of social innovation and social finance across the country. The Strategy must build on and accelerate these achievements, not reinvent them.

Government must level the playing field by broadening its understanding of innovation beyond business and technology. It must acknowledge the important contribution that charities, non-profits and co-operatives and mutuals make to Canadian society, including through innovation. It must breach the perceived walls between the structures and motivations of the charitable and non-profit, private, and public sectors. Cross-sectoral partnerships are essential for the type of systems change we hope to create.

We believe in the potential of social innovation and social finance to give meaningful effect to the Government’s commitments to reconciliation with First Nations, Inuit and Métis peoples - but Indigenous social innovation and social finance must be Indigenous-led. Our recommendations recognize that Indigenous communities must be engaged in the design of and benefit from measures resulting from the Strategy. As well, the Government should commit to engaging Indigenous organizations in supporting and partnering in Indigenous-led processes on social innovation and social finance, at a pace determined by Indigenous communities and under the guidance of community leaders.

For the Strategy to succeed, it is imperative that it be implemented in a genuinely integrated, whole-of-government fashion involving all of the relevant federal departments and agencies.

The federal government has a once-in-a-generation chance to rethink its approach to today’s most complex challenges, equipping communities with the new tools and knowledge they need to achieve better social, economic and environmental outcomes. Now is the time for the Government to step up and demonstrate its support for social innovation and social finance. With smart investments, our communities are poised to realize their aspirations for a more inclusive, prosperous, and sustainable future.

It is time for a Canadian Social Innovation and Social Finance Strategy

In June of 2017, the Government of Canada appointed us, a diverse group of seventeen individuals, to a steering group with the mandate to guide the development of a Social Innovation and Social Finance Strategy for Canada. Today, following a year-long process, we are advancing recommendations for the Government to consider as it delivers on its commitment. We believe that now is the time for the Government to step up and invest in communities so that, together, we can deliver better social and environmental outcomes for Canadians.

Social innovation and social finance are needed to make progress on the complex problems facing the country. Social innovation refers to new ideas which, when adopted, improve a community’s well-being. As commonplace as they now seem, universal health care and curbside recycling began as social innovations and have transformed systems of the past. Recent innovations like microfinance, fair trade and safe injection sites are disrupting systems of today. Social finance refers to the practice of making investments intended to create social or environmental impact, in addition to financial returns. Social finance is a key source of financial support for developing and scaling social innovation. Simply put, social innovation is innovating for social and environmental good, often through the support of social finance. It is through this kind of innovation that we make our communities, country and world more inclusive and sustainable.

The Government of Canada has a critical role to play in supporting social innovation

From coast to coast to coast, individuals and organizations across all sectors are forming networks of relationships, or ecosystems, where they work together to make their communities more inclusive and sustainable places through social innovation and social finance. Consider, for example, a partnership between social service and government agencies who share their data to reduce child poverty. Or, the philanthropic and private sectors working together to prevent high blood pressure among seniors or to improve outcomes for Canadians facing employment barriers. Through their collective efforts, these ecosystems, and many others like them, are using social innovation and social finance practices to improve our country.

The Government of Canada’s role is to support these ecosystems by using the key levers at its disposal.

The federal government establishes the legal and regulatory environment in which charities and many businesses operate. It delivers billions of dollars in grants and contributions, the terms and conditions of which dictate to what extent they can be used in innovative ways. It has the ability to stimulate private investment and drive market demand through its purchasing decisions. It supports academic research and publishes vital statistics. It can act as a national convenor to help innovators in different parts of the country learn from each other and expand the reach of ideas that have been proven effective elsewhere. And crucially, it has the ability to make strategic investments across federal programs to foster innovation for social good.

The Government must first level the playing field for social innovation

Recently, the Government of Canada announced unprecedented investments to streamline innovation supports for the private sector. While these investments in business and technological innovation may have a positive impact on the economy as a whole, they will not address enduring socio-economic challenges such as chronic homelessness, child poverty and income inequality. Investments in technological innovation without commensurate support for social innovation are not only a missed opportunity, they also create risks for society. Economic growth, unbalanced by social advances, risks heightening inequality and environmental degradation.

We need a different approach to these challenges. The Government must broaden its understanding of innovation beyond business and technology and make similar strategic investments to support innovation for social and environmental purposes.

Our call for a level playing field is guided by the belief that Canada will not make meaningful progress on the deeply entrenched social and environmental issues we face solely by using traditional tools and approaches. Government will always have a role to play in providing and enhancing existing public services. Growing pressures on government budgets further require us to develop creative solutions to maximize the impact of public investments.

We cannot solve our most pressing problems without partnering across sectors

Delivering a more inclusive vision of innovation means inviting all sectors to the table.

Government must acknowledge the important contribution that the charitable and non-profit sector, co-operatives and mutuals make to Canadian society. Not only do they provide essential services that improve the quality of life for Canadians — they also innovate and make significant economic contributions. These sectors are essential partners of the Government, not just delivery agents, and should be acknowledged and invested in as such.

The private sector is also part of this conversation. Never before have leaders of major corporations taken such significant public stands on the need for companies to make positive contributions to society. While cross-sectoral collaboration is essential for the type of systems change we aspire to set in motion, we are conscious of competing interests and motivations and must ensure the public good is at the centre of our efforts. This is necessary to ensure that communities benefit from the private sector’s growing imperative for the private sector be part of the solution.

Governments must create a cultural shift within their organizations. Instead of continuing to focus on short-term grant programs that are only capable of targeting one symptom of a more complex issue, they must work to develop scalable solutions, capable of addressing the root of the problem. They must breach the perceived walls between the structures and motivations of the charitable and non-profit and private sectors, and partner with organizations advancing social and environmental missions, regardless of their corporate structure.

An opportunity for Canada to lead on the global stage

Canada has much to learn from its international peers on the role that national governments can play to stimulate innovation for better social and environmental outcomes in communities. Canada also has lessons to share about its early experiences in this space.

The Strategy is an opportunity for Canada to take its place as a leader in social innovation. It is also an opportunity for Canada to demonstrate leadership and meet its commitments under the United Nations Sustainable Development Agenda, a global framework of action encompassing 17 goals aimed at eradicating poverty and building a healthy planet.

Indigenous social innovation and social finance must be Indigenous-led

We met with Indigenous groups and individuals from across Canada to seek their perspectives on the development of the Strategy. Throughout these conversations, we learned of successful examples of social innovation in Indigenous communities. The First Nations, Inuit and Métis community practitioners we spoke with expressed cautious optimism for the potential of social innovation and social finance practices to create better social and environmental outcomes in the areas they identify as priorities, and to promote capacity-building and knowledge transfer in Indigenous communities. We were also told the language of social innovation and social finance does not always resonate with the approaches that are used in communities. Practitioners identified a need to adapt the language of social innovation and social finance to Indigenous cultural perspectives, working with communities at their own pace. We heard that certain aspects of social innovation and social finance, notably, the potential for an increased role for private and philanthropic capital, pose risks for Indigenous communities. We were reminded that the Government has committed to a renewed, Nation-to-Nation, government-to-government, and Inuit-Crown relationship based on the recognition of Indigenous peoples’ right to self-determination, self-government and nation-building.

Indigenous participants asserted that Indigenous communities must be engaged in the design of and benefit from measures resulting from this Strategy. This is needed particularly in the areas of building capacity and skills, funding and capital, and knowledge sharing and mobilization. As well, the Government should commit to engaging Indigenous communities and organizations in supporting and partnering in Indigenous-led processes on social innovation and social finance, at a pace determined by them.

Our recommendations

This report lays out recommendations to equip communities with the tools and knowledge they need to achieve better social, economic and environmental outcomes.

These recommendations were informed by a large-scale consultation process undertaken in the fall of 2017, which involved more than 60 in-person engagement sessions, two online processes, and outreach to over 15,000 Canadians and more than 400 expert stakeholders, as well as an analysis of the activities currently under way through the support of municipal, provincial and territorial governments.

The way in which these recommendations are implemented will be as important as their content. They are intended to be acted on together to create a cohesive set of supports for communities. Social innovation and social finance are powerful tools for advancing diversity and inclusion. To ensure this potential is fully realized, those with lived experience of poverty, women, official language minority communities, immigrants, refugees, visible minorities, persons with disabilities, seniors, and youth, among other groups, need to be actively involved in the implementation. It is also imperative that the Strategy entails a whole-of-government response that builds on and reinforces existing social innovation and social finance ecosystems across Canada.

Our vision is for a better future for Canada, where healthy and sustainable communities thrive; where individuals, especially those in vulnerable circumstances, have access to good jobs, and to safe, affordable housing; a future characterized by reconciliation with Indigenous peoples, dynamic official language minority communities, vibrant diversity, and social and economic inclusion. It has been a privilege to connect with innovators from all thirteen provinces and territories who are working hard to realize this future. These individuals and organizations have already achieved much under considerable constraints. As you read the many examples of social innovation found throughout this report, we urge you to imagine what more could be achieved with the federal government taking its place as a decisive and supportive partner.

Social innovation

Canadians understand the value of commercial and technological innovations and their role in driving productivity improvements in the economy. Social innovation is a similar concept in that it denotes the application of new ideas, methods and practices which create social, rather than strictly commercial value. Social innovation ranges from new ways of designing community services to different methods for organizations to work together, and everything in between. Figure 8 illustrates how social innovation comes in different shapes and sizes.

Social innovation is about more than service improvement. For a new program, a redesigned service, or a new partnership between organizations to be considered social innovation, it must have a transformative impact for the organization, community or region that adopts it. In this way, social innovation has the potential to disrupt entire systems for the better. Social innovation matters because it leads to measurable progress on the complex social and environmental challenges facing communities. Just as we do with technological innovation, we should ensure that the right conditions are in place to promote social innovation in communities.

Social finance

Social finance differs from responsible investing in that those making and receiving social finance investments intend to create tangible social and environmental impacts through their activities. Figure 11 illustrates the relationship between different forms of investment, including social finance, impact investing and responsible investing.

Text description of figure 11

The figure has two sets of three columns, reading from left to right. Each column in the first set of three columns describes different types of investing. The first column states: "Traditional investing: Limited or no focus on environmental, sustainability, & governance (ESG) factors." The second column states: "Responsible Investing: ESG risks integrated into analysis of all holdings." The third states: "Socially Responsible Investing: Negative and positive screening of ESG ricks used to align a portfolio to specific values."

In the second set of three columns, each column describes a type of social finance investing. The first two columns fall under Impact investing. The first column states: "Finance First: Focus on one or more issue areas where social or environmental need create market opportunity for market rate of returns." The second column states: "Impact First: Focus on one or more issue areas where achieving social or environmental impact may require financial trade-offs." The third column states: "Community investment: Socially motivated investment where priority is placed on maximizing social impact and investors may be willing to accept lower returns."

Below, an arrow titled: "Finance solidaire" states: "Focus on community, economic development, charities, non-profit organizations and co-operatives."

Adapted from: State of the Nation – Impact Investing in Canada (2014) and Portrait 2016 de la finance responsable (2017)

Canada’s social finance market is diverse, with different organizations pursuing different priorities across a broad continuum. There are social finance investors who seek to achieve market rates of return while creating social or environmental impact. Others are ready to accept lower returns in order to maximize their social or environmental impacts, seeking to deploy investments as tools to create positive impact in communities. Some intermediaries create social finance funds or products that straddle the continuum of investment presented in Figure 11, using "capital stacks" to allow different classes of investors to participate in the same fund or project. A common thread runs across this diverse continuum: the power of finance is being harnessed to intentionally deliver social and environmental value.

The social finance market brings together three types of actors:

• Demand-side actors seeking investment, such as charities and non-profit organizations, co-operatives and mutuals, and private businesses advancing a social or environmental mission;
• Supply-side actors seeking to create social impact, or investors, including foundations, institutional investors such as pension funds, and retail investors such as Canadian households seeking to create social and environmental impact through their savings; and
• Intermediaries who connect demand with supply, including financial intermediaries such as community loan funds, credit unions, Aboriginal Financial Institutions, and chartered banks.

Social finance has the potential to put billions of dollars in private and philanthropic capital to work on social and environmental issues and, in doing so, to create new sources of revenue for organizations to develop and scale projects that improve community well-being. Social finance is itself a social innovation, as it can reshape financial markets to harness the power of capital to deliver social outcomes, and also acts as a key source of financial support for developing and scaling social innovation in Canada.

Who is involved?

One of the key principles underpinning our recommendations is that no one sector or organization can solve complex social or environmental problems on their own — everyone has a role to play in creating better outcomes in their communities. The power of social innovation and social finance is that it brings together individuals and organizations across the charitable and non-profit, private and public sectors to co-create better solutions for the challenges that matter to communities.

Different groupings, including the co-operative, social economy, social enterprise and community economic development movements, are key drivers of social innovation and social finance in various regions of the country. The individuals and organizations that participate in these movements, which are not mutually exclusive, have often been at the forefront of efforts to address social, economic and environmental challenges facing Canada’s communities. We respect the existing work taking place in regions as well as their choice and use of the specific terms and concepts that reflect their own communities, needs and priorities. The recommendations advanced in this report, if implemented, will help these movements come together and expand the reach and impact of their success.

Our recommendations are also intended to enable new forms of partnership across sectors, including the private and public sectors. There is increasing interest in the private sector to participate more actively in initiatives to improve outcomes in communities. This can be seen in the rise of businesses declaring a social or environmental mission, sometimes called social purpose businesses or socially responsible businesses. It can also be seen in the increasing number of corporations going beyond traditional forms of corporate social responsibility to incorporate social and environmental considerations in the way they do business. Likewise, public sector organizations at all levels are testing new tools and techniques, both to stimulate social innovation in communities and to increase their ability to partner across organizational silos.

Except when specific sectors must be named to clarify recommendations, this document will use the terms "social purpose organizations" and "those engaged in social purpose work" in order to improve ease of reading and to respect regional and sector-based preferences in terminology. However, we are aware that these terms may have technical limitations, and we recommend that the proposed Social Innovation Council (see recommendation 2) be consulted before they are used in federal legislation, policy, programming or official communications moving forward.

3.1 Capacity and skills

Those engaged in social purpose work have long demonstrated their specialized knowledge and skills in meeting the needs of the communities they serve. Frontline staff working to tackle poverty and homelessness, for example, apply knowledge in social work, addictions, and mental health to understand the strengths and needs of the populations they support on a daily basis. Other social purpose organizations use their business acumen to generate impressive financial results while serving their communities.

Social purpose organizations must also build on their existing skill sets to take advantage of the opportunities provided by social innovation and social finance. The effective practice of social innovation and social finance requires a unique set of skills that often blends distinct disciplines, including but not limited to science and technology, business and finance, and social work. New methods such as social research and development, design thinking, data analytics, impact measurement and digital literacy are increasingly important skills for social purpose organizations to obtain. In addition to skills development, social purpose organizations also must build their internal capacity. We heard during consultations that organizations seek greater capacity for early stage innovation and experimentation as well as partnership development and knowledge transfer. First Nations, Inuit and Métis community practitioners told us that the capacity and skills gap is particularly acute in the Indigenous context.

Unfortunately, social purpose organizations face significant challenges in building their capacity and skills. Financially overstretched, they struggle to afford training for their staff. In particular, this is a major barrier for organizations operating in rural and remote communities and official language minority communities, both of which rely heavily on volunteers. The alternative is to hire professionals who already hold these skills. However, this does little to build the long term capacity of the organization and is often too expensive, especially to access highly-paid professionals like programmers and designers.

While a spectrum of tools and supports is emerging across sectors and regional ecosystems to help social purpose organizations develop their capacity and skills, more should be done to complement and build on these efforts. Intermediaries, for example, or organizations that provide support, tools and resources in service of other organizations and innovators, often provide the physical and virtual spaces such as accelerators, labs, and online learning platforms that connect organizations, facilitate collaboration, and foster new skills. But most intermediaries struggle to secure sustainable financing that enables them to reach social purpose organizations at a significant scale.

Grants, a major revenue source for most social purpose organizations, rarely allow funding recipients to invest in their own capacity and skills development as it is often considered "overhead" that will not directly reach communities. This applies to many federal grant and contribution programs, whose short-term, project-based funding is ill-equipped to help social purpose organizations build the skills and capacity they need over the longer term to meet the complex challenges they are facing.

The Government of Canada’s innovation, business development and skills training supports could support social purpose organizations in their work. But while most of these programs have broad eligibility criteria, research suggests that, in practice, they tend to focus on conventional for-profit businesses and are rarely accessed by or accessible to social purpose organizations.

Some federal supports, such as the Canada Small Business Financing Program and the Business Development Bank of Canada, are closed to charitable or non-profit social purpose organizations. And for social purpose organizations that do not generate revenue through the sale of goods and services, there are simply no federal supports available that are comparable to the advisory services, networking and collaboration opportunities, and hiring subsidies offered through the National Research Council’s Industrial Research Assistance Program.

3.2 Funding and capital

Grants and contributions programs

Granting dollars are a significant source of funding for social purpose organizations seeking to test and grow innovations with the potential to deliver better outcomes for communities. Across Canada, more and more governments, foundations and corporations are testing funding practices aimed at fostering innovation in a variety of areas including homelessness, settlement services, and youth employment. The federal government, for example, is currently experimenting with the use of outcomes-based funding, prizes and challenges, and micro-grants. Social impact bonds, a form of outcomes-based funding, have been piloted across the world as a way to leverage private capital for improved social outcomes.

Figure 22. Innovative funding practices building capacity for innovation in communities

The « Ensemble pour le développement social des communautés francophones et acadiennes du Canada » initiative is using the intermediary model, an innovative funding practice, to encourage social innovation in official language minority communities across Canada. « Ensemble » seeks to create better outcomes for francophone seniors, caregivers, youth and families in vulnerable situations. « Ensemble » is supported by Employment and Social Development Canada.

Under this model, the FAAFC (Fédération des aînées et aînées francophones du Canada), a federation of 12 associations representing francophone seniors across Canada, acts as an intermediary. Together with its partners the Alliance des femmes de la francophonie canadienne, the Commission nationale des parents francophones, and the Fédération de la jeunesse canadienne-française, the FAAFC is responsible for building capacity, supporting partnership development, and disbursing funding to smaller organizations, who may otherwise find it difficult to access national funding opportunities or to attract private investment.

Since its inception in the autumn of 2016, « Ensemble », comprised of 29 projects, has reached approximately 114,000 francophones across the country, providing a direct service to more than 11,350 citizens in more than 80 francophone communities in Canada. It generated $3.5 million in additional investments in its first eighteen months. A similar, equally successful model is under way in English-speaking communities in Québec.

In our consultations, we heard a great deal about how reform in federal government granting practices could do more to stimulate social innovation in communities. We heard that social purpose organizations want to spend more time testing out new ideas to advance their missions than on burdensome application and reporting processes. They want to be able to adjust the terms of their funding agreements as they go, learning from past mistakes and incorporating the experiences of others. They want longer-term funding arrangements that recognize the amount of time and resources required for innovation to occur and its benefits to be realized. They want funding that covers the true cost of their programs, including costs like evaluation, technology, and capacity-building. Organizations want grant and contribution programs that are accessible to rural and remote communities and take into consideration the unique realities of official language minority communities.^{Footnote 25} Many Indigenous groups and individuals we spoke with told us that inflexible funding practices prevent communities from pursuing the solutions they know are needed in their communities.

Ultimately, social purpose organizations desire funding relationships based on mutual trust and respect — relationships that acknowledge the immense contributions made by social purpose organizations every day to help government meet its objectives.

Statistics Canada data on federal government funding for R&D illustrates the limited funding available for research and development directed to social issues or to the portion of the charitable and non-profit sector that excludes higher education:

Text description of figure 23

Figure 23 is a Statistics Canada chart illustrating 2017 federal funding granted for research and development in the areas of natural sciences and engineering compared to social sciences, humanities and the arts. The first comparison indicates higher education, natural sciences and engineering received over $2,581 million versus $513 million received by social sciences, humanities and the arts.

The second comparison indicates internal research and development, natural sciences and engineering received over $1,816 million versus under $241 million to social sciences, humanities and the arts.

The third second comparison indicates research and development in the private sector, natural sciences and engineering received $549 million versus $3 million to social sciences, humanities and the arts.

The fourth comparison indicates the non-profit sector, natural sciences and engineering received $39 million while social sciences, humanities and the arts received $1 million.

Source: Statistics Canada, CANSIM table 358-0001.

The need for reform in government granting practices has long been identified as a priority for grant recipients. In 2006, the Independent Blue Ribbon Panel recommended measures to make the delivery of grant and contribution programs more efficient while ensuring greater accountability. Those recommendations, many around the need to cut red tape, are still relevant today and should be implemented.

But there are also barriers hampering the growth of social finance in Canada. There is a lack of specialized intermediaries who understand the business models of social purpose organizations and are able to assess their risk profile and help them build their investment readiness. And while investors are interested in social finance, they may be reluctant to commit their capital because limited track record data is available to help them accurately distinguish between real and perceived risks. The result is a market where supply and demand are not meeting each other to full effect, and where some regions are seeing very little social finance activity. Social purpose organizations, especially those that are non-profit, have trouble finding products that meet their needs. In turn, investors are frustrated by the lack of investment-ready opportunities, resulting in billions of dollars that could be used to address pressing social and environmental needs being directed elsewhere.

Some jurisdictions, both in Canada and abroad, have acted to address similar barriers and catalyze growth in social finance, including through capitalization initiatives, tax incentives, and regulatory measures encouraging or requiring investors and large intermediaries, such as banks, to direct capital into social finance. In 2018, the Standing Senate Committee on Social Affairs, Science and Technology released a report entitled The Federal Role in a Social Finance Fund, calling on the Government to learn from the experience of other countries and invest in the creation of a social finance fund.

3.3 Market access

Social purpose organizations which generate revenue, including social enterprises, contribute to economic growth. These organizations exist in communities across Canada and in almost every economic sector, including consumer goods, food and beverage, management consulting, health care, construction, building maintenance services, renewable energy and affordable housing. In addition to the economic value these organizations provide, they also advance social or environmental objectives that create stronger and healthier communities for Canadians. Many social purpose organizations, for example, support individuals facing multiple barriers to employment by providing them with the employment and training opportunities they need to re-enter the labour market. The revenue generated by enterprising activities helps social purpose organizations improve their financial sustainability in an environment where grant funding and donations are increasingly scarce. It may also be less restrictive than other sources of revenue and can provide social purpose organizations with more flexibility in how they use the funds to meet the needs of their communities.

Governments and other large purchasers are ideally positioned to help social purpose organizations grow their businesses. The Government of Canada, for example, purchases approximately $19.8 billion in goods and services every year on behalf of federal departments and agencies.^{Footnote 27} These purchasing decisions could be leveraged to create greater social and economic value in communities. As the single largest purchaser of Canadian goods and services, the Government has substantial purchasing power. It has the opportunity to act as a "first purchaser", driving growth of social purpose organizations through its procurement decisions, just as governments around the world have done with products that many initially dismissed, such as recycled paper and electric cars. Currently, however, social purpose organizations are at a disadvantage when participating in the procurement processes of governments and large corporations. Social purpose organizations are often small in size and lack the capacity to engage in large-scale procurement processes. While small and medium for-profit enterprises face similar difficulties, they benefit from the assistance of the Office of Small and Medium Enterprises at Public Services and Procurement Canada.

Governments around the world have begun using the term social procurement to refer to the practice of leveraging existing procurement spending to create social value — not only to help social purpose organizations improve their access to markets, but also to ensure their purchasing decisions are aligned with their social objectives. Social procurement initiatives have been tested internationally by Scotland and the United Kingdom, France, Finland, and Australia to great effect. We also see examples across Canada of municipalities, regional governments, and other large institutions experimenting with social procurement. Ontario, British Columbia, Manitoba, Nova Scotia, Vancouver, Montreal and Toronto, for example, have recently drafted policies designed to ensure that government purchasing in these jurisdictions provides tangible benefits to communities.

Community Benefit Agreements (CBAs) are one approach to social procurement used by many purchasers, including governments, to ensure that local communities benefit from investment in infrastructure and other large economic development projects. Benefits can include employment and apprenticeship opportunities for disadvantaged populations, affordable housing, promotion of local social enterprise, and better environmental sustainability. At the time of writing, Parliament is considering a Private Member’s Bill (Bill C-344) that would enable the Government to gather information on the community benefits created by its suppliers. As of May 2018, Infrastructure Canada has signed eight integrated bilateral agreements with provinces and territories (Ontario, New Brunswick, Nova Scotia, British Columbia, Alberta, Nunavut, Yukon and Northwest Territories) to apply a Climate Lens and a Community Employment Benefits initiative to relevant programs under the $180 billion Investing in Canada Plan.

The Government of Canada has already recognized the value of leveraging existing procurement spending to advance social and environmental objectives. The Government has created the Procurement Strategy for Aboriginal Business (PSAB) to support capacity development among Indigenous businesses. Public Services and Procurement Canada is also addressing its Minister’s mandate commitments to support green and social procurement practices and is currently considering whether to increase the use of CBAs in infrastructure contracts. So far, however, social procurement initiatives have been limited to increasing the diversity of suppliers by supporting women-led small and medium-sized enterprises. While these initiatives are welcome, there has been little movement to engage in social procurement initiatives beyond those relating to diverse suppliers. The Government has an opportunity to coordinate and add to its existing procurement-related initiatives to maximize the socio-economic benefits generated from federal spending. Many First Nations, Inuit and Métis community practitioners we spoke with also expressed great interest in further improving markets for Indigenous businesses through improvements to PSAB.

3.4 Policy and regulatory environment

Clear and supportive legislation, regulations, and policy guidance are required to support social innovation, social finance, and social enterprise. These "rules of the game" strongly shape the ability of social purpose organizations to achieve their social and environmental purposes. Unfortunately, we have heard through our consultations that the current rules and a lack of clarity arising from them, notably the rules under the Income Tax Act governing registered charities and incorporated non-profit organizations,^{Footnote 28} are constraining the ability of organizations to innovate, generate earned income through social enterprise, work collaboratively with other sectors, and ultimately, deliver better outcomes in their communities. Instead, organizations are expending significant resources — time, money, and energy — to ensure that they are in compliance.

Though we heard about a number of provisions in the Income Tax Act and Canada Revenue Agency administrative guidance throughout our consultations, the following legal and regulatory issues stood out:

Some of the First Nations groups and individuals we spoke with told us that certain provisions of the Indian Act can create barriers to social and economic development in their communities. As well, inconsistency across federal policies defining Indigenous organizations has negatively impacted Indigenous development. Overall, those we consulted felt that the policy and regulatory approach affecting social purpose organizations is unnecessarily restrictive and focuses too heavily on compliance activities. Those we consulted desired a policy and regulatory regime that enables mission-related work and is adapting to how social purpose organizations are addressing the complex environmental, social, and economic challenges facing our world. Organizations also desire more clarity and transparency in the way the current rules are applied.

Overall, those we consulted felt that the policy and regulatory approach affecting social purpose organizations is unnecessarily restrictive and focuses too heavily on compliance activities. Those we consulted desired a policy and regulatory regime that enables mission-related work and is adapting to how social purpose organizations are addressing the complex environmental, social, and economic challenges facing our world. Organizations also desire more clarity and transparency in the way the current rules are applied.

Facilitating social innovation and social finance requires more than just rewriting old rules and creating new ones. There are currently no dedicated venues for government and social purpose organizations, including charities and non-profits, to address issues of shared interest. There are also few mechanisms to ensure that the knowledge and interests of social purpose organizations are taken into consideration across government departments and policies in a sustained and collaborative fashion. Those we consulted thought it was necessary for the Government to develop a new relationship with these organizations, one that recognizes the critical contribution they make as a sector to the economy and to the well-being of Canadians.

It is an opportune time to address the policy and regulatory environment surrounding social innovation and social finance. The Government of Canada has already identified that modernization of the legal and regulatory regime governing charities and non-profits is a priority through mandate commitments for the Ministers of Finance, Justice, and National Revenue. In 2017, the Consultation Panel on the Political Activities of Charities released its recommendations, some of which directly relate to social finance and social enterprise. The Senate has also recently appointed a Special Committee on the Charitable Sector which continues to gather evidence on the state of the sector from a variety of witnesses. The Social Innovation and Social Finance Strategy is an excellent opportunity to further the progress already made through these initiatives.

3.5 Evidence and knowledge sharing

Robust social innovation ecosystems need evidence of what works and how to achieve good outcomes on the ground. That evidence is a combination of timely and accurate data, practical research and evaluation, and knowledge gained through the everyday experience of social purpose organizations. This evidence base is inherently complex, as it is multidisciplinary and spans both the non-profit and charitable sector and the business and financial sectors.

The current gaps in available research and data, both practitioner-led and academic, and the lack of adequate opportunities to share and adapt this valuable knowledge, are significant drags on the potential of Canada’s social innovation ecosystems. Through our consultations, we heard that good models for knowledge sharing have been developed, but that more is needed to link existing networks and knowledge infrastructure, fill gaps where they exist, and strengthen bonds across Canada’s varied social innovation ecosystems.

Critical data gaps currently hobble our capacity to include evidence-based decision-making and reliable data in national and community-level policy creation, particularly since the core federal surveys and satellite accounts have been dormant for a decade or more. Fortunately, social enterprise surveys are now being done nationally and regionally and are providing important insights (see Figure 35).

The federal government collects a mountain of administrative data about the organizations that apply for funding, their activities and results. However, administrative data on grant and contribution funding does not currently capture information about the use of social innovation, social finance or social enterprise in projects. This makes it difficult to know what government is doing to support social innovation ecosystems. It also limits how well government can compare the effectiveness of innovative approaches versus business as usual. A simple change in program data collection to include tags for social innovation and social finance, and tracking of social purpose organizations, where appropriate, would make administrative data more useful for policy, evaluation, and reporting purposes.

In keeping with the Government of Canada’s commitment to Open Government, federal administrative data that is publicly shared would be useful to social purpose organizations. Researchers in particular require community-level data that is disaggregated at the most granular level possible.

By contrast, many social purpose organizations and researchers see greater value in tailoring evaluations to help individual organizations improve their outcomes, a view shared by leading international proponents including the OECD. Some respondents expressed concerns that standardized metrics would cause mission drift or reduce funding for hard-to-measure issues or outcomes.

The Strategy must recognize the validity of these two diverging perspectives. The Strategy cannot impose common impact metrics on anyone. However, it should support measurement and evaluation tailored to help social purpose organizations innovate to improve their outcomes. The Strategy is also well positioned to advance impact measurement as a field by supporting pilots and collaborative research on voluntary common measurement frameworks that capture the contributions of social innovation and social finance to social outcomes. To the extent possible, metrics for the Sustainable Development Goals such as ending poverty should be included in pilots and collaborative research.

The Social Sciences and Humanities Research Council and the Natural Sciences and Engineering Research Council are making partnership research on social innovation a priority. This is promising, but we would also like to see new academic research funding that encourages emerging academics to focus their research on Canada’s social innovation ecosystems.

3.6 Awareness and mobilization

Social innovation and social finance ecosystems are most effective when the individuals and organizations committed to improving their communities — whether they be charities and non-profits, large corporations, public servants, or members of the public — are aware of and can use innovative approaches for creating social impact.

Indigenous social innovation and social finance ecosystems

A majority of the Indigenous groups and individuals working on innovative initiatives to address social and environmental issues identify with the six areas for action our Steering Group used to structure our stakeholder engagement, while also facing challenges specific to their context.

We heard that the capacity and skills gap is particularly acute in the Indigenous context, with many organizations and individuals interested in engaging on social innovation and social finance finding themselves unable to do so given their limited resources and competing priorities. Practitioners noted that partnerships where a transfer of capacity is well-defined and targeted are one of the key success factors in community development and in new initiatives. We were told that limited access to and inflexible funding practices associated with federal grants and contributions prevent communities from pursuing the solutions they know are needed in their communities. It was clearly expressed that Aboriginal Financial Institutions require additional capital in order to increase business supports and development lending. There was great interest in further improving access to markets for Indigenous businesses as an avenue to contribute to Indigenous community prosperity, including through improvements to the Government’s Procurement Strategy for Aboriginal Business. We also heard that the policy and regulatory environment, notably the Indian Act and policies surrounding the definition of "Indigenous organizations," are difficult to navigate and create barriers to community empowerment. And finally, regarding knowledge sharing and awareness, participants in our discussions identified a need for Indigenous-led knowledge transfer initiatives and innovation hubs.

Challenges for Indigenous communities

In our dialogue, Indigenous groups and individuals also conveyed some important messages regarding challenges specific to Indigenous communities and risks that social innovation and social finance practices could potentially create for them.

First, it was reiterated to us that the Government has committed to a renewed, Nation-to-Nation, government-to-government and Inuit-Crown relationship based on the recognition of Indigenous peoples’ right to self-government and self-determination. First Nations, Inuit and Métis community practitioners told us that, to give effect to this commitment, Indigenous social innovation and social finance initiatives should be Indigenous-led and should not duplicate those that already exist or are being advanced in mainstream Canadian society. We heard that the Government of Canada should commit to engaging National Indigenous Organizations, at a pace determined by them, to facilitate potential Nation-to-Nation collaborations in this area.

Second, many Indigenous groups and individuals we spoke with shared deep concerns regarding an increased role for businesses and philanthropic organizations in Indigenous communities, which could result from the adoption of social innovation and social finance practices. First Nations, Métis and Inuit community practitioners welcome the contributions of private and philanthropic capital as well as opportunities for building skills and knowledge through partnerships with non-Indigenous partners, but reiterated that community development must take place on Indigenous peoples’ terms, according to their priorities, in keeping with the principles of self-government and nation building.

Finally, many Indigenous groups and individuals asked us why Indigenous groups should spend their limited resources engaging on social innovation and social finance absent any indication from the Government that this area will be a priority moving forward. Some described social innovation as the “flavour of the month,” or a reallocation of existing program dollars which could add to burdensome application and reporting processes for federal grants. When asking these questions, the Indigenous community practitioners we spoke with expressed their hope that the Government will in fact demonstrate its commitment and undertake formal engagement in this area.

The way forward

As a Steering Group, we continue to strongly believe in the potential for social innovation and social finance to give meaningful effect to the Government’s commitments to reconciliation and a renewed relationship with Indigenous peoples. Indigenous communities must be engaged in the design of and benefit from the new programs and measures resulting from these recommendations, particularly in the areas of building capacity and skills, funding and capital, and knowledge sharing and mobilization.

Government should commit to engaging National Indigenous Organizations to undertake potential Nation-to-Nation collaborations at a pace determined by them.

In the meantime, the Government should identify funding to support an Indigenous-led social innovation and social finance needs assessment and mapping exercise. This initiative should aim to better define gaps specific to the Indigenous context, adapt language and definitions in culturally appropriate ways, and identify promising, Indigenous-designed projects for building capacity, cross-sectoral partnerships and knowledge sharing through social innovation and social finance approaches. It should be designed and implemented by First Nations, Inuit and Métis communities. Given the high level of interest in building capacity and sharing knowledge, funding for this initiative could be allocated through one of two new measures being recommended in our report, the Social Innovation Ecosystem Program (recommendation 5) and/or the Social Innovation Data and Research Initiative (recommendation 11).

5.1 Governance and public service infrastructure

To this end, the Government may wish to explore creative organizational models for the Office, including housing the Office staff in multiple departments and units that are active on social innovation (such as the Privy Council Office’s Impact and Innovation Unit, Employment and Social Development Canada’s Community Development and Homelessness Partnerships Directorate, and Innovation, Science and Economic Development’s programs delivering supports to small and medium-sized enterprises) to increase reach, coordination, and collaboration among departments and issue areas. The Office should also take advantage of innovative hiring practices currently available to the public service, such as Free Agents, Interchange and Talent Cloud, to staff the Office with a dynamic mix of experienced public servants and external practitioners and experts. Finally, the Office should be resourced at a level commensurate with its responsibilities.

5.2 Capacity and skills

5.3 Funding and capital

Recommendation 6: Create a Social Finance Fund.

We recommend that the Government create a Social Finance Fund (“the Fund”) to accelerate the development of social finance ecosystems across Canada. This Fund would be delivered under a stakeholder-led governance model to ensure it connects to the broader, integrated set of supports being recommended for the Strategy in this report. The Government’s investment in the Fund would result in improved access to capital for social purpose organizations working to address persistent social or environmental challenges, with an emphasis on innovative approaches responding to regional and local realities and targeting those who live in the most vulnerable circumstances.

Competitive process

The Fund would invest in multiple social finance investment funds across sectors and regions, through fair, open and transparent solicitation processes. Through these investments into intermediaries, which could include, for instance, community loan funds, credit unions, Aboriginal Financial Institutions, chartered banks, or private equity funds, the Fund would demonstrate the viability of social finance and develop the intermediary sector, while addressing the key barriers currently inhibiting growth in the market.

Figure 47. Capital gap for social purpose organizations

Studies undertaken in Ontario have estimated that the capital gap facing social purpose organizations ranged between $45 million for for-profit social purpose organizations alone (2017)^{Footnote 46} and $170 million for all social purpose organizations (2010).^{Footnote 47} These provincial figures suggest a much greater capital gap at the national level.

Governance

The Fund’s governance model should be guided by the objective of maximizing the positive social outcomes generated by its investments. It should also involve a significant role for stakeholders in the design and delivery of the initiative, in order to ensure that it responds to the needs of communities. To give effect to this outcomes-driven, stakeholder-led governance model, the Social Innovation Council would consult existing umbrella organizations, networks and regional stakeholders active in social innovation and social finance to identify thematic priorities for each region as well as national themes of shared concern. The Council would also advise the Government on the establishment of a selection committee composed of investment professionals with social finance experience and knowledge of local and regional social innovation ecosystems. The selection committee would be responsible for guiding the design of competitive solicitation processes and providing recommendations to the Government on the selection of intermediaries to receive investment from the Fund, in line with the regional and national priorities set by the Council. Protocols would be established to protect the selection committee’s neutrality and independence and to ensure that recommendations are based on sound investment principles. The Government would make the final decisions, deploying its capital through a federal entity with the authority to make investments. This entity would serve as the legal conduit for the Government to flow monies to intermediaries and to ensure proper oversight.

Text description of figure 48

The diagram flows from left to right and illustrates how the Government of Canada’s investments in social finance investment funds can reach social purpose organizations and create positive social, economic or environmental change. The diagram also shows how these investments can flow back to benefit the Government of Canada.

If the Government of Canada invests in social finance investment funds—potentially including community loan funds, Aboriginal financial institutions, or funds managed by credit unions or banks—that have secured outside sources of non-government co-investment, it finances social purpose organizations advancing a social or environmental mission (e.g. charity-owned social enterprise hiring refugees, Indigenous-owned businesses in clean energy, co-operatives implementing business solutions for food security). This directly creates positive social, economic and environmental impact in communities.

The diagram also demonstrates that social finance investment funds can connect to non-government co investors, potentially including charitable foundations and institutional investors, which can further create support for social finance investment funds.

These social finance investment funds can return back to the Government of Canada with expert advice from a selection committee and following the thematic priorities established by the Social Innovation Council.

Investment approach

The Fund should aim to accelerate growth across market segments, in order to reflect the diversity of practices, capital needs and investor requirements in Canada. The Government’s investments should enable the development of a variety of financial vehicles supporting the growth of a range of social purpose organizations. A key priority of the Fund should be to support intermediaries that offer longer-term “patient” capital investments in the form of debt financing, loan guarantees and equity investments or some combination of the three. To achieve this goal, the Fund could be delivered under multiple streams, each focusing on a targeted objective, market segment or financing tool or product. The selection committee would advise the Government on the number and design of these streams. Across all streams, the selection committee should actively consider opportunities to invest in innovative models with the potential to accelerate the growth of social finance, while maintaining a focus on investments which maximize social or environmental impact, rather than what is new or novel. Under any scenario, intermediaries’ investment proposals would be vetted against their alignment with the regional and national priorities identified by the Council.

Figure 49. The Chantier de l’économie sociale Trust

In 2006, the Government of Canada provided $22.8 million in seed funding to the Fiducie du Chantier de l’économie sociale. This $52.8 million fund provides patient capital financing to support start-up, expansion and real estate activities of co-operatives and not-for-profit businesses. Over 10 years, the Trust invested in 212 projects, creating or maintaining 3,183 jobs and mobilizing an additional $374 million in investment. Building on its acquired expertise and the recognition of its actions, the Fiducie du Chantier de l'économie sociale has set up investment funds for the specific needs of social economy sectors. In 2016, the first associated fund was created, with $33.5 million fully funded by private partners. The fund is used to renovate community housing projects. Recently, the Fiducie entered into agreements for a second associated fund with an initial amount of $10 million, also financed by private partners, to build student housing.

Leveraging

The Government should only invest in intermediaries which have leveraged outside sources of non-government capital. Where appropriate, the Government could make its investments on a subordinated basis to attract co-investors.

Repayable investment

The Government’s capital would be invested on a repayable basis, with a view to preserving the value of the total investment over a fifteen to twenty-year timeframe. We recommend that the capital returned to the Government be recycled into further investments to ensure that the Fund remains evergreen and continues to build the social finance market and create positive outcomes for communities over the long term.

Capital allocation

The Fund’s total envelope of capital should be comparable in size to recent market-building initiatives, such as the Venture Capital Catalyst Initiative and the creation of Sustainable Development Technology Canada. The bulk of investments would be made into intermediaries operating at the regional level. However, a percentage of the capital should also be reserved for intermediaries operating at the national level, as long as their activities are aligned with the priorities identified by the Social Innovation Council.

Figure 50. The Canadian Co-operative Investment Fund

The Canadian Co-operative Investment Fund (CCIF) launched in January of 2018 with $25 million in committed capital from a number of co-operative and credit union partners across Canada. The CCIF is a response to a critical challenge facing co-operatives and mutuals: the challenge of accessing capital without compromising their autonomy and democratic ownership. The Fund is doing this by offering cooperatives and mutuals a source of capital that accounts for the realities of the cooperative business model. CCIF has approved the first investments in four co-operatives and is expanding its pipeline of potential investments in innovative co-operatives across the country.

Additional support for the CCIF would enhance the reach of the fund and help the Government advance its mandate to promote the development of co-operatives in Canada, which was established through Motion M-100.

Impact measurement and evaluation

Streamlined reporting requirements and criteria for impact measurement would be established to ensure accountability and allow for a rigorous evaluation of overall impact. Recognizing that further research is needed to address the complex methodological and capacity challenges that currently limit the use of common impact metrics, standardized impact measurement would not be made mandatory for intermediaries receiving investment. The Government would partner with practitioners and experts to select or adapt an existing impact measurement system and tools, which investees could use to satisfy their reporting and impact measurement requirements. Strong preference should be given to impact measurement approaches that build on international best practices and align with the Sustainable Development Goals. The Government should make the results of the initiative publicly accessible, both to ensure transparency and to deepen understanding of the financial performance and social impact delivered through social finance.

Policy alignment

The Government would consult the Social Innovation Council, other federal departments and provincial/territorial governments to ensure policy alignment with other initiatives where governments are currently using investment-based approaches to advance policy objectives: for example, the Canada Mortgage and Housing Corporation’s National Housing Co-Investment Fund, the investments made under the Québec government’s Social Economy Action Plan, and the Ontario government’s Social Enterprise Demonstration Fund. Where investments made by the Fund are in areas such as affordable housing or the social economy, the Government would aim to invest in intermediaries that also meet the essential criteria set by other government initiatives, in order to promote a strong level of complementarity.

Capacity-building

Several features should be built into the Fund to ensure that it increases the availability of financing opportunities for social purpose organizations across Canada, including in regions where there is currently little social finance activity. The competitive solicitation processes launched by the Fund would also require intermediaries applying for investment to outline what partnerships they have created to build investment readiness. These processes would also be staggered to provide communities with the time to develop the necessary partnerships. On occasion, promising investment opportunities could receive joint support from the Social Innovation Ecosystem Program (recommendation 5). Finally, the federal entity designated to deliver the Fund should also be provided a small envelope of grant dollars which it could use when additional support for capacity-building is required for a promising investment opportunity to come to fruition.

Figure 51. Future measures for growing social finance

A Social Finance Fund would address the barriers inhibiting the social finance market from reaching its full potential and, in the process, mobilize large sums of private and philanthropic capital to tackle pressing social and environmental issues facing Canadian communities. This initiative is needed to kick-start growth in regional social finance ecosystems across Canada.

Following the implementation of a Fund, the Government may also wish to explore legislative, regulatory or fiscal measures to further mobilize capital for social good, drawing inspiration from the Community Economic Development Investment Funds in Nova Scotia, the Community Reinvestment Act in the United States, the Social Investment Tax Relief in the United Kingdom, or the Green Funds Scheme in the Netherlands. These opportunities could be examined by the Social Innovation Council (recommendation 2), paying close attention to the need to adapt these measures to the Canadian context.

5.4 Market access

5.5 Policy and regulatory environment

5.6 Evidence and knowledge sharing

5.7 Awareness and mobilization

Consultation and engagement process

Between August 2017 and May 2018, we, the seventeen members of the Social Innovation and Social Finance (SI/SF) Strategy Co-Creation Steering Group, and Employment and Social Development Canada (ESDC) officials supporting this work led a consultation process to explore the potential of using social innovation and social finance tools to address persistent social challenges.

Co-creation is itself an engagement process that involves external stakeholders as well as the Government of Canada. ESDC actively participated in the process, from a Director General named as co-chair of the Steering Group to countless direct interactions with the departmental officials supporting the Steering Group. Officials from multiple federal departments also provided input into the Steering Group meetings and deliberations. As Co-Creation Steering Group members, we engaged with each other in meetings, email threads, and teleconferences to discuss our perspectives and co-create our recommendations based on collective decades of experience across social innovation and social finance in multiple sectors and from different parts of Canada.

We worked with the ESDC Secretariat to develop a consultation document and then engage Canadians and social purpose organizations across the country to hear their ideas. We also reviewed findings of several previous studies, including: Exploring the Potential of Social Finance in Canada (2015) (the report of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities); and Mobilizing Private Capital for Public Good (2014) (the report of Canada’s National Advisory Board to the G7-based Social Impact Investment Taskforce).

We gathered responses to the consultation document in four ways: online consultations, targeted webinars, in-person consultations, and formal submissions (electronic and hard copy). Online consultations included a Government of Canada consultation website, Engagement HQ. Active from September 29, 2017, to January 31, 2018, Engagement HQ welcomed broad public sharing of social innovation successes, ideas and input on the six areas for action, and quick polls on key questions about social innovation and social finance. There were more than 4,800 visits to our Engagement HQ portal and 94 submissions. Between September 25 and November 24, 2017, a platform called Assembl offered a shared space for debate and conversation, gathering more than 500 comments from 127 participants. Throughout the consultation and engagement process, we received ideas by email and in writing from national and local organizations, as well as from interested Canadians.

Our outreach extended out through both the networks of Steering Group members and the networks of key stakeholders. We were grateful to many organizations that featured articles about the consultation and engagement process in their newsletters. Information was also sent to over 15,000 young Canadians through the Privy Council Office Youth Secretariat youth engagement lists.

We consulted in person and virtually with stakeholders across Canada. As part of the engagement process, we received written submissions from over 50 organizations working across Canada. We received input from hundreds of people and from many groups and organizations that support social innovation, social finance and social enterprise across the country, including: networks, financial organizations, academics, social procurement groups, community-based social purpose organizations, and social enterprise organizations. Formal submissions and in-person consultation sessions are listed below.

What we heard

Overall, Canadians expressed strong interest in the Government pursuing innovative approaches to persistent social challenges. Many organizations and individuals offered their support for ongoing and new work to develop social innovation and social finance ecosystems. We heard that people want opportunities to work together across sectors, across issue areas, and with governments at all levels to improve outcomes for Canadians.

Early on, we put forward and heard agreement that the proposed Strategy could:

• promote and support better social outcomes for Canadians;
• focus on improving the lives and well-being of people in the most vulnerable situations;
• support partnerships across sectors; and
• include work to advance the United Nations Sustainable Development Goals (SDGs), which encompass environmental, social and economic development goals.

The Indigenous groups and individuals we met with as part of our stakeholder engagement process expressed cautious optimism for the potential of adopting social innovation and social finance practices to create better social and environmental outcomes in the areas they identify as priorities, and to promote capacity-building and knowledge transfer in Indigenous communities. First Nations, Inuit and Métis community practitioners also shared perspectives on risks that social innovation and social finance practices could potentially create for them. We heard that the Government should commit to further engagement with communities and National Indigenous Organizations, at a pace determined by them, to explore potential Nation-to-Nation collaborations in this area.

Text description of infographic - Engaging with Canadians

Description

• The Social Innovation and Social Finance Strategy Co-Creation Steering Group’s 17 members engaged in person with hundreds of Canadian individuals and organizations
• Over 50 consultation and engagement sessions held in person, by teleconference and online
• Consultation and engagement sessions included community organizations, non-profit organizations, charities, foundations, co-operatives and mutuals, social enterprises, unions, umbrella groups, official language minority communities, individual social innovators and members of the general public

Outreach

• Cityscape pointing out cities across Canada: Vancouver, Calgary, Saskatoon, Regina, Winnipeg, Toronto, Almonte, Ottawa, Gatineau, Montréal, Halifax.
• Email outreach to over 15,000 Canadian youth through the Youth Secretariat
• More than 400 experts and practitioners invited to a deliberative online forum
• Engagement with over 35 Indigenous organizations

Online

• #socialinnovation
• #socialfinance
• 14,200+ total visits
• 640+ contributions
• 900+ quick polls, votes and comments

Social Innovation and Social Finance Strategy Co-Creation Steering Group

1. Ajmal Sataar (Co-chair)
2. Allyson Hewitt
3. Brenda Zurba
4. Carl Pursey
5. Catherine Scott (Co-chair, government representative)
6. David LePage
7. David Upton
8. Don Palmer
9. Francine Whiteduck
10. James Tansey
11. Lauren Dobell
12. Marie J. Bouchard
13. Nancy Neamtan
14. Norm Tasevski
15. Roselyne Mavungu
16. Stephen Huddart
17. Tania Carnegie

Formal submissions to the Steering Group

1. Agents of Change
2. Aiding Dramatic Change in Development
3. Canadian Association of Social Workers
4. Canadian Credit Union Association
5. Canadian Union of Public Employees
6. Canadian Worker Cooperative Federation
7. Cause and Effect Marketing
8. Centre for Social Innovation
9. Community Futures Network of Canada
10. Co-operatives and Mutuals Canada
11. Corporation de développement communautaire du Haut-Saint-Laurent
12. Corporation de développement communautaire MRC de l’Assomption
13. Ensemble pour le développement des communautés Francophones et Acadiennes du Canada
14. Enviro-Stewards
15. Eva’s Initiatives for Homeless Youth
16. Exchange Inner City
17. Fédération des communautés francophones et acadiennes du Canada
18. Futurpreneur Canada
19. Green Science
20. Iler Campbell Limited
21. Imagine Canada
22. Imagine Canada and the Canadian Council on Social Development (on behalf of the Working Group on Sector-Wide Data for the Charitable and Nonprofit Sector)
23. Individual submissions
24. Individual Submission (with the support of Simon Fraser University Community Economic Development Alumni)
25. La Maison Bleue
26. La Ruche
27. Le Conseil québécois de la coopération et de la mutualité and le Chantier de l’économie sociale
28. Local Economic Development Lab (LEDlab)
29. Momentum (Calgary)
30. National Open Innovation Collaborative Ecosystem
31. National Union of Public and General Employees
32. Ontario Nonprofit Network
33. Pillar Nonprofit Network
34. Prosper Canada
35. Québec City Innovation Forum
36. Quebec Community Groups Network
37. Réseau Transtech
38. Rick Hansen Institute
39. Sensorica
40. Social Enterprise Council of Canada
41. Tamarack Institute
42. Territoires innovants en économie sociale et solidaire
43. The Canadian Network for the Prevention of Elder Abuse
44. The Ontario Co-operative Association
45. The Raw Carrot Soup Enterprise
46. The Social Enterprise Consortium
47. The Social Research and Demonstration Corporation
48. The Winnipeg Boldness Project with Exeko, InWithForward, and Skills Society
49. Toronto Enterprise Fund
50. Toronto Enterprise Fund and Ontario Social Economy Roundtable
51. United Way Calgary
52. United Way Centraide Canada
53. Woodgreen Community Services
54. Young Entrepreneur Leadership Launchpad (YELL Canada)

Consultations and engagement with stakeholders

The following is a list of some of the many formal and informal consultations. This list includes in-person discussions, webinars, and teleconferences.

Indigenous engagement