Social Finance – levers to advance social and economic prosperity
“Engaging local talent and investment towards initiatives that benefit everyone in the community”
By Jack Vanderkooy, Social Finance Learning Group, and Board Chair, Habitat for Humanity South Georgian Bay
It was a cold December day two years ago when I reconnected with Rosalyn Morrison, Institute of Southern Georgian Bay Board Chair, to get caught up on the Institute’s programming and each other’s lives. Due to COVID lockdowns, this was a walking meeting with coffee in hand on the streets of Collingwood. Roz mentioned that the Institute was focusing on what a sustainable recovery in the economy would look like post-pandemic through the “Mapping Our Road to Recovery” series.
One area being explored was how Social Finance can engage community to think about community wealth. With my financial background and passion for a healthy community, I was in. I was invited to the first meeting of the Social Finance Learning Group, facilitated by Marilyn Struthers, a long-time resident of Grey & Bruce who works with emerging practises in the social sector. The meeting was attended by over 20 people across the region, from a variety of sectors with varied expertise.
What have I learned? Social Finance is not a well-understood concept, especially in smaller communities. Starting with a Social Finance Primer, prepared by Marilyn Struthers, we started our year-long learning journey. There are many facets to Social Finance, but the goal is engaging local talent and investment towards initiatives that benefit everyone in the community.
Every dollar we spend, lend, or invest, has an impact on our communities.
Here is what I learned:
- Social enterprise is simply a business which operates for the good of the community, usually with a triple bottom line focus – People, Planet, Profit. Social entrepreneurs are passionate about their offering, be it food services, counselling, arts and crafts or some new technology. Many social enterprises are self-financed, while some larger initiatives attract funding from local investors who seek purpose for their investments for the greater good.
- Social procurement or purchasing for social good is a concept where corporations and municipalities recognize that every purchase has an economic, environmental and social impact. To that end, social procurement seeks to make a strategic contribution to both the local economy and the overall well-being of the community. This is accomplished through policies which require these organizations to source a certain percentage of their products locally, from socially responsible suppliers. Social procurement has an economic multiplier effect in that every $100 spent locally results in $63 being reinvested in the local economy, whereas every $100 spent outside of the community results in only $14 reinvested locally. Every dollar we spend, lend, or invest has an impact on our communities.
- Community Investment Co-ops attract funds from local investors to lend to local enterprises resulting in healthy economic activity, local employment opportunities, better quality of life, community resiliency and overall healthy and sustainable relationships within the community. As a co-operative, governance involves all members with equal votes, where no one person or entity can control the enterprise. All decisions are made for the benefit of the co-op members and the broader community.
- Social Finance tools can be used to accelerate housing and social service options within a community. This can be in the form of Social Investment Bonds, Community Loan Funds, Partner Loan Funds, Foundation Loan Funds and Peer to Peer Lending. Each have their unique features, but all focus on using local capital to fund initiatives that enhance the wellbeing of the community.
- Affordable Housing is one need in our community which can use Social Finance to accelerate the number of housing units that can be made available to a larger segment of our population who otherwise cannot afford to purchase or rent a home at market rates. In a future article, we will explore how social finance can be used to address the housing need in our region, with the goal of growing sustainable and inclusive communities that meet the needs of all its residents.
Note: The Social Finance Learning Group has evolved into the Social Finance & Housing Working Group for 2022. They are now involved in a National Lab exploring municipal levers and community investment to help create the housing stock most needed in our region.