Author: Peter Cantelon, Executive Director
Have you heard? The Social Finance Fund has finally begun flowing thanks to the federal government moving ahead on an announcement made five years ago.
You haven’t? That’s ok. For those of us steeped in the space it seems like you cannot throw a metaphorical rock these days without hitting social finance or impact investment.
This is a good thing. For those not yet overly familiar with social finance a very simplified definition comes to us from Alex Nicholls and Jed Emerson in the excellent text Social Finance –
“Social finance refers to the allocation of capital primarily for social and environmental returns, as well as in some cases, a financial return…impact investments are those that target specific social objectives along with a financial return and measure the achievement of both.”
In the sense of the above definition Jubilee Fund is a social finance non-profit that makes impact investments.
While social finance has been around as long as finance in the sense that there have always been socially oriented financial initiatives of one sort or another it really is coming into its own these days as a standalone discipline.
Why? Well, primarily this has to do with the growing number of external pressures that increase on a daily basis; pressures such as homelessness and the housing crisis; food security; climate change and the myriad pressures that go with that; etc.
These issues have grown to such a scale that traditional economic tools are simply not capable of adequately addressing them and thus people and organizations have been increasingly turning to social finance for assistance.
One of the any initiatives rolling out in the realm of social finance is the Social Finance Fund. This is a $755 million fund designed to be distributed by a national network of three wholesalers to regional intermediaries (like Jubilee Fund) for distribution as loans, guarantees and direct investment to social purpose organizations.
The primary goal of the fund is to act as a catalyst sparking the fledgling Canadian social finance sector into growth, sustainability and eventual maturity.
The fund is designed to assist with social innovation and development with emphasis on the following sectors: women, Indigenous peoples, low-income people, Black Canadians and other racialized peoples, people with disabilities, members of the 2SLGBTQ2+ community, official language minority communities and, recent immigrants and refugees.
The fund will operate over the next 10 years with the first $400 million having been released in May of 2023.
It is important to understand that the Social Finance Fund is not a granting program but rather a lending and investment fund. This means that the monies distributed will need to be paid back and/or generate a financial return on investment.
The good news is that the cost of funds (interest charged, returns expected) will be lower than the traditional financial market in consideration of the social impact that is being generated.
Are you a social purpose organization that needs to access and/or leverage this kind of funding? Reach out to us at Jubilee Fund for more information. We will do our best to guide you in the process and help you better understand how social finance and the Social Finance Fund can assist you achieve and exceed your objectives.