While the charity is permitted to provide training to these individuals, they are not allowed to provide job placement services directly to employers. This is because the Canada Revenue Agency could view the activities as providing a private benefit to the employer that is not incidental to achieving a charitable purpose, which is not permissible under current rules. Footnote 34 As a result, the automotive shop is unable to work with the charity to find good employees, even if the partnership is more effective in creating employment opportunities for Canadians in vulnerable circumstances than traditional job readiness programs.
Example 2: A registered charity has been advised that their charitable status is under review because their purpose is to support entrepreneurs in Canada. Canada Revenue Agency guidance states that "promoting entrepreneurship by helping entrepreneurs bring new and innovative ideas to the marketplace" is not charitable, unless it is for activities in areas of social and economic deprivation.
Footnote 35 The charity currently receives government funding. Private benefit rules: Current rules preventing charitable resources from being used for private benefit protect the integrity of the charitable model and ensure that charitable resources are used only for public benefit. However, in some cases a charity may convey private benefits in the course of creating a public benefit. This scenario is more likely to occur for charities that are engaging in social innovation, social finance, and social enterprise, where the lines between private and public benefit are blurred.
Administrative guidance permits charities to undertake activities that result only in incidental private benefit, which is to say benefits that are necessary, reasonable and proportionate to the public benefit achieved. However, there are some situations, such as entrepreneurship and employment programs, where the public and private benefits are so closely intertwined that it is difficult to ascertain whether private benefit is indeed incidental.
A large registered charity runs a social enterprise that sells donated home and building supplies which would otherwise go to the landfill. Because their business model was so new, the charity initially had to go through a lengthy review process with the Canada Revenue Agency in order to ensure they were compliant with the regulations.
As a well-established organization, the charity was able to invest the money and staff resources needed to satisfy these conditions. The cost and intensity of the review process, however, is beyond the means of smaller charities and is a major deterrent to innovation. 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.
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.
Footnote 37 New data from the Rideau Hall Foundation and Imagine Canada finds that total donations claimed by Canadians have stagnated since and that charities are "relying on an ever-decreasing proportion of the population for donations. It is an opportune time to address the policy and regulatory environment surrounding social innovation and social finance.
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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 , 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. 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.
Social innovation ecosystems need diverse kinds of data in order to innovate and grow. This foundational data establishes critical baselines for evidence-based policy on how to support social innovation. It is also essential for monitoring and reporting on the growth, financing needs, and social issues addressed by social purpose organizations. The Government has not conducted a national survey on the size of the charitable and non-profit sector since and stopped publishing economic data on the sector in 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 A number of surveys have recently been released that are providing important insights into the state of social enterprises in Canada. 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.
PolicyWise is an Alberta-based registered charity that works in partnership with universities, social service organizations, and the Government of Alberta. It aims to improve the well-being of children and families by leading, creating, enabling, and mobilizing research and evaluation for evidence-informed policy and practice.
Its Child and Youth Data Lab links up various government administrative data about health and social services in order to promote effective service delivery on a range of issues including: family violence, mental health, early childhood development, and fetal alcohol spectrum disorder. Researchers in particular require community-level data that is disaggregated at the most granular level possible. More and better impact measurement data and research are needed to show which social innovations and organizations achieve better outcomes than more traditional approaches. Impact measurement as a field is still in the early stages, but we are aware that work is under way with coalitions of stakeholders, researchers and governments in Canada and internationally to develop improved methodologies for common metrics.
Data technologies such as artificial intelligence are also emerging quickly, and hold the promise of better and faster ways to assess impact. Canada lags behind international practice leaders who are creating national impact measurement policies and frameworks, such as Scotland and the United Kingdom. To grow the social finance marketplace so that it can provide more sustainable social funding, many investors see the need for comparable impact data for due diligence and reporting.
The report of the G7-based Social Impact Investment Taskforce, on which Canada participated, stated that effective impact investing was impossible without social impact measurement. However, our consultations surfaced a lively debate on comparable impact measurement. Some respondents asked for robust common outcomes measurement frameworks, such as developing common indicators to measure social innovation contributions to the United Nations Sustainable Development Goals. Investors and funders we consulted asked for comparable impact data on innovative interventions and organizations.
The Carleton Centre for Community Innovation 3ci is working with the Government of Ontario and other partners to develop a common approach to impact measurement for Ontario social enterprises, framed by two of the UN Sustainable Development Goals. The project is intended to develop and test a common process, data standards and tools which social enterprises can use to communicate their impact in their own words, while also contributing to aggregated measurement of sectoral impacts in Ontario. 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.
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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. Knowledge creation comes out of practice, from those doing social innovation and social finance. Researchers are able to systematize these experiences for further learning. Applied research, including productive community-academic research partnerships, is vital in terms of broadening and deepening our understanding of what works — and why — in the social innovation space.
Our consultations found that practitioners often have difficulty finding and seeing the relevance of existing academic research to their undertakings. We also heard that more research partnerships between practitioners and academics are needed and that practitioners and clients need to be acknowledged and paid for their research contributions.
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.
Encouragingly, Canadians are beginning to demonstrate increasing interest in new ways of creating social and environmental impact. Consumers are using their purchasing power to support brands that promote fair labour practices and environmental stewardship. Canadian investors, particularly millennial investors, are engaged in crowdfunding and are increasingly interested in responsible investment opportunities.
Many charitable foundations have publicly committed to setting aside portions of their wealth portfolios for social finance investment, ranging from five and ten percent, even percent in some cases. Large private companies are also making bold statements about the need for businesses to contribute to society in the course of their profit-making activities. Unfortunately, the vast majority of Canadians still have very little knowledge of social innovation and social finance.
The same is true of many organizations with key roles to play in building successful social innovation and social finance ecosystems, including public sector agencies at all levels of government. Footnote 42 There are similar challenges related to awareness of social enterprise and social innovation more broadly, leading to missed opportunities for Canadians to create impact through their donations, volunteering and purchasing habits.
There are encouraging signs that interest in new ways of creating social and environmental impact is increasing among Canada and key groups. The Responsible Investment Association has conducted surveys which found that millennial investors in Canada show significantly more interest in social finance and responsible investments more broadly than previous generations.
However, Purpose Capital has found that there is a generally low level of awareness of social finance in the financial sector, in particular among key professionals such as financial advisors and wealth managers. Increasing awareness of social finance among retail investors and finance professionals could mobilize vast sums of private capital for social and environmental impact. Awareness is not sufficient to create change on its own. Those interested in engaging in social purpose work also need venues and opportunities to act on their newfound knowledge, to connect with others, and to get to work on concrete projects and initiatives.
All across Canada, there are examples of networks mobilizing to share knowledge as well as spaces, events and conferences where those engaged in social purpose work gather to learn from each other and collaborate on issues of shared interest. While there are great networks active in Canada today, we heard that social innovation has been happening in pockets across the country and that the active groups and sectors are not well connected.
Some organizations and individuals, including the National Impact Investment Practitioners Table and Social Innovation Canada — a national affiliate of the global Social Innovation Exchange, SIX — have been working to develop and connect national networks in support of social innovation and social finance. Following a rigorous vetting process, Ashoka Fellows become life-time members of an expansive network of peers and partners.
There are over 3, Ashoka Fellows in 90 countries around the world. Ashoka provides fellows with financial, capacity-building and community support with the aim of seeing their innovations thrive and directly improve the lives of millions of people. Canada is home to 50 Ashoka Fellows.
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Their work has contributed to reducing poverty, provided a platform for people in marginalized and vulnerable situations , reduced carbon emissions, increased conservation, improved health and championed human rights. Barb Steele, Executive Director of Ashoka Canada notes "The Ashoka Canada Fellow network provides a bridge for social innovations to scale at home and around the world. We also heard that more could be done to include the private sector into existing conversations.
Private sector businesses have made large and significant contributions to social innovation through social venture funding, corporate social responsibility, corporate philanthropy, partnerships with charities and non-profit organizations, and workplace inclusion initiatives. Opportunities also exist for sharing knowledge and collaborating internationally. Canada has much to learn and share from the experiences of other jurisdictions that have led the way in enabling and supporting social innovation and social finance.
Through this dialogue, we learned of myriad Indigenous-led initiatives, both past and present, where innovative ways of working and partnerships helped improve quality of life in communities. Aki Energy is a social enterprise working in Manitoba First Nations communities to develop and implement sustainable energy and food solutions. By transitioning on-reserve households to geothermal and solar power, this non-profit venture seeks to make communities self-sufficient for electricity while providing local opportunities for young people to be trained and employed on renewable energy projects.
Since then, it has embraced ways of incorporating play into a wide variety of applications that can benefit tourism, education, and economic development, such as Te a ch, a made-in-Nunavut curriculum that teaches Indigenous computer science and game development. Both co-operatives are the largest employers of Indigenous people outside government in their regions and the main provider of essential services such as food, fuel delivery, and accommodation.
These enterprises are vehicles for the self-determination, innovation and economic diversification of their communities. However, we also heard that mainstream definitions of social innovation and social finance are often unknown in Indigenous communities, meaning that the language we use can create confusion and act as a barrier.
This lack of clarity surfaced in discussions on the potential of mobilizing capital for social finance to address social and economic challenges. It was noted that there is a need to build social finance literacy among those who are new to social finance, specifically regarding the different ways in which investors and intermediaries such as banks and Aboriginal Financial Institutions can deploy different types of capital in support of community development.
Some of the practitioners we spoke with also expressed the view that an initiative or program must be disruptive and deliver transformational improvements in order to truly be considered social innovation. Participants in our discussions presented this as an opportunity for Indigenous communities to adapt the language of social innovation and social finance to their cultural perspectives, at their own pace. The tagline of the first Indigenous Innovation Summit in Winnipeg, held in was "Innovation is an Indigenous value. Despite these challenges, the Indigenous groups and individuals 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.
Many told us that key aspects of social innovation and social finance, including the blending of social, economic and environmental objectives and the importance of partnerships, are consistent with Indigenous cultural values. We also heard that social innovation and social finance practices have the potential to create spaces where Indigenous and non-Indigenous people can learn from each other as they work side by side to build capacity and promote the transfer of knowledge in Indigenous communities.
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.
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.
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. 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. 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.
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. 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.
Government has a strategic role to play in supporting the development of social innovation and social finance ecosystems. The Government of Canada will see maximum impact if it makes investments across the areas of action in an integrated fashion. A finance initiative without accompanying capacity-building supports will likely struggle to find investment-ready opportunities or fail to benefit the hardest-to-reach communities where access to capital is most difficult.
A plan to increase social procurement will not be impactful if regulatory and legislative barriers prevent charities and non-profits from participating in the marketplace. We are firm in our belief that the Strategy will likely fail to reach its objectives if it is not implemented with a genuinely integrated approach. Our first set of recommendations focus on the governance and public service infrastructure required to facilitate a horizontal approach across the federal government. If they are to succeed, the measures we recommend must be designed and implemented with the following principles in mind.
Finally, we reiterate that any project or initiative flowing from these recommendations and which primarily affects Indigenous communities should be Indigenous-led. In the previous section, we recommended that funding be identified for an Indigenous-led social innovation and social finance needs assessment, which would better define gaps specific to the Indigenous context. We recommend that the Government embed a commitment to social innovation and social finance in Canadian legislation. This will underpin the entire Social Innovation and Social Finance Strategy and provide the legislative framework needed for the Government of Canada to create the specific mechanisms, policy measures and regulations required to foster the social innovation and social finance ecosystem in Canada.
In doing so, it will serve to establish a new relationship between the Government and social purpose organizations, one that recognizes them as important partners in achieving prosperity and quality of life. And it will ensure that the Government considers social impacts, in addition to economic and environmental impacts, in all its decision-making. The development of federal framework legislation should be led by the Office for Social Innovation recommendation 3.
Key elements of the legislation should include:. The Government may wish to consider amending existing legislation to meet the objective of more explicitly considering social impacts. Bills C and C are two examples currently before the House of Commons where the Government is enshrining this more holistic approach in law. Bill C seeks to amend the Federal Sustainable Development Act to expand the requirement that decision-making be reviewed through an environmental, economic, and social lens to more departments and agencies of government. Bill C enacts the Impact Assessment Act, which, among other things, outlines a process for assessing the environmental, health, social and economic effects of designated projects.
The existence of the Council should be embedded in legislation recommendation 1. The Council will institutionalize a collaborative relationship between social purpose organizations and the federal government. The Council will advise the Government on how federal programs and policies can support social innovation and social finance ecosystems and could oversee implementation of a federal strategy.
The Council will be supported by the Office for Social Innovation recommendation 3. The Council should be multi-sectoral and include representatives from the charitable and non-profit, co-operative, academic, private, and public sectors, as well as the labour movement and official language minority communities. In keeping with the principle of recognition outlined above, the individuals whom the Government selects to sit on the Council should either be connected to or knowledgeable about the networks serving social purpose organizations in their region or sector; social purpose organizations active in social innovation and social finance ecosystems should participate in the selection process to ensure this objective is met.
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The Government should also select Council members with significant experience in community, which is to say, who work or have worked at the local level with individuals in vulnerable circumstances. We recommend that the Government establish a permanent Office for Social Innovation within the federal public service, serving five key functions in the overall governance structure of the Social Innovation and Social Finance Strategy:.
The Office for Social Innovation will play a crucial role in building the processes and relationships to ensure that departments and agencies implicated in the roll-out of the Strategy are committed to a shared vision. It should be structured in a way that fosters and enables genuine and deep interdepartmental collaboration. These venues are not traditional conferences; they have led to important partnerships operating across borders to deliver improved social and environmental outcomes for communities. This type of exchange between practitioners is critical to ensure that countries embarking on capitalization initiatives avoid risks encountered elsewhere and ensure results are delivered for communities right from the outset.
Canada should be at the table for these conversations. 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. Many existing federal programs are already suited to support the development and adoption of innovations that improve community well-being. However, they are focused on conventional businesses or technological innovation and are not tailored or marketed to social purpose organizations.
They should be open by default. The research found that only two of the programs and services reviewed specifically excluded non-profits, but that access was unclear, ambiguous or appeared restricted for 93 of the other programs and services. We propose that the Government use this opportunity to determine where programs could be opened, adapted, or modified to better meet the needs of social purpose organizations.
Small changes made as a result of this review, such as modifying eligibility criteria, creating new program streams, or raising the awareness of program officers, could make a decisive difference. The review should recognize the value of these programs both to social purpose organizations that generate revenue and to those that do not. Following this review, the Government should work with the Social Innovation Council recommendation 2 to identify additional federal innovation supports where more could be done to improve access and relevance for social purpose organizations.
Many of the recommendations in our proposed Strategy will ensure that existing federal rules and programs are designed and implemented to support social innovation and social finance over the long term.
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However, social purpose organizations that are already addressing the pressing social and environmental issues facing communities cannot wait for these systems to change; they require government investment in the near term in order to innovate. As such, we recommend that the Government establish a five-year Social Innovation Ecosystem Program to respond to pressing gaps identified across social innovation and social finance ecosystems. The Social Innovation Ecosystem Program would be a key lever of the Strategy, ensuring it is delivered in a cohesive and coordinated fashion and serving to further recommendations under other areas of action.
For example, the program could serve to model best practices for enabling innovation through grant and contribution funding, an issue addressed in recommendation 7. The Social Enterprise Ecosystem Project S4ES was launched in by a consortium of partners that came together to develop a cohesive ecosystem of supports for social enterprise in Canada. S4ES connects training, marketing, and impact measurement resources for social enterprises operating anywhere in Canada. It offers an online marketplace as well as an accelerator program to build and scale proven social enterprise models that enhance employment opportunities and provide direct services to vulnerable individuals.
The creation of the Social Innovation Ecosystem Program could help scale up successful projects such as S4ES and fund new initiatives to develop ecosystems of supports that empower social purpose organizations to improve outcomes in their communities. While the Social Innovation Ecosystem Program could be leveraged to build capacity for social procurement, we also recognize that more targeted action is required in this specific area. Recommendation 8 proposes measures to address this gap. Public Services and Procurement Canada could work through the Social Innovation Ecosystem Program to add to and enhance its support for social procurement.
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 Fund would invest in multiple social finance investment funds across sectors and regions, through fair, open and transparent solicitation processes.
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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.
Footnote 47 These provincial figures suggest a much greater capital gap at the national level. 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.
The Government would make the final decisions, deploying its capital through a federal entity with the authority to make investments. Get A Copy. Kindle Edition , pages. More Details Friend Reviews. To see what your friends thought of this book, please sign up. To ask other readers questions about A Future for Everyone , please sign up. Be the first to ask a question about A Future for Everyone.
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