Submission to: Social Innovation and Social Finance Co-Creation Steering Group November 2017
Why did we write this submission? Mandate: Through the Social Innovation and Social Finance Strategy, the Government of Canada is exploring ways to enable and support communities and social purpose organizations in the development of new and innovative approaches to persistent social problems. Overall Goal To create an ecosystem that fosters social innovation to improve outcomes for vulnerable populations and create inclusive and sustainable communities, through the approaches of social finance and social enterprise. Our Submission This Community Futures Network of Canada submission describes how the federal government can enhance and stimulate greater social enterprise access to business support programs delivered through the Community Futures Program. 2
What is a Social Enterprise? What is a Social Enterprise? The federal government defines a social enterprise as an organization that seeks to achieve social, cultural or environmental aims through the sale of goods and services. The social enterprise can be forprofit or not-for-profit but the majority of the net profits must be directed to a social objective with limited distribution to shareholders and owners. 1 1 http://www.ic.gc.ca/eic/site/ccc_bt-rec_ec.nsf/eng/h_00016.html What is Community Futures? Community Futures (CF) is a program that supports community economic development (CED) and builds the capacity of communities to realize their full potential. The purpose of the CF Program is to help communities develop and implement local solutions to local problems. The program provides financial support to Community Futures Organizations (CFOs) that, in collaboration with other partners and stakeholders, can assess their situation and develop strategies to meet their needs to provide support to small and medium-sized enterprises (SMEs) and social enterprises (SEs) and to undertake appropriate community economic development initiatives. 2 2 Community Futures Program Terms & Conditions Effective October 3, 2010 3
Range of Social Enterprises supported by Community Futures Organizations Since the Community Futures Program was launched in 1985, local CFOs across Canada have regularly engaged in providing advice and financial assistance to not-for-profit organizations in their communities. The community organizations they have assisted cover a broad spectrum of activities including, among others: Day Care Societies Royal Canadian Legions Recreation Societies Adult Training Facilities Service Clubs Youth Clubs Forestry Groups Arts/Entertainment Groups Publishing Groups Transportation Groups Waterfront Associations Yacht Clubs Port Societies Music Festivals Fall Festivals Community Golf Courses Health Facilities Museums Community Special Care Facilities Food Co-ops 4
The following are some examples of the success that CFOs have had in social enterprise development 5
British Columbia Community Futures Strathcona has provided a wide range of multi-level expertise and financial support to the Courtenay and District Museum and Palaeontological Centre over the past 25 years, including: Technical assistance in accessing government funding; Financing various expansion initiatives; Fundraising and supporting over three million dollars of capital and exhibitions projects that have made the museum a popular international destination. The Courtenay and District Museum and Palaeontological Centre wouldn t be where it is today without the support we received from Community Futures Strathcona. Deborah Griffiths, Executive Director Courtenay and District Museum and Palaeontological Centre 6
Nova Scotia Harmony Bazaar Festival of Women and Song is a three-day music and cultural festival in Lockeport Nova Scotia. CBDC Shelburne has been there for us since the beginning. The CBDC has actually been the catalyst for us to grow. We ve been able to make use of their social enterprise loans, and that helped us to have the capital we needed to grow as a non profit organization. The first festival we really grew with was when we brought in Rita MacNeil and Melanie Doane. We didn t know what we needed to do for that to happen. We are all volunteers. None of us had run a festival before. The capital we were able to get from the CBDC helped us to comply with some technical requirements that enabled us to have those artists perform at our festival. Thanks to the CBDC we ve been able to run a good quality festival in a beautiful location. Erin Williams, Artistic Director - Harmony Bazaar Festival 7
Ontario Georgina Trades Training Inc. (GTTI) in Sutton West, Ontario is an innovative, flexible, and socially responsible non-profit training centre that for the past 11 years has been meeting the needs of the local job market by empowering people to realize their full potential through training and skill development. The South Lake Community Futures Development Corp. has played a critical role in the growth and development of this organization since day one. As a founding partner, CF South Lake provided GTTI with the financing that allowed them to refurbish the building that continues to serve as its headquarters and training facility. Over the years, CF South Lake has also provided GTTI with additional financing so they could acquire equipment and supplies that have enabled the training centre to expand its training options to address broader training needs in the community. Through the programming offered at GTTI, over 9,000 local area residents have received training support since the centre opened its doors in March 2006. 8
Quebec The Coopérative Forestière Haut Plan Vert (CHPV) is located in Lac-des-Aigles in Quebec s regional county municipality of Témiscouata. It was founded in May 1984 in response to a call to action by the citizens of one of the forest communities of the Bas-Saint-Laurent who wanted to get involved and help revitalize their local economy. During its formative years, CHPV received both technical and financial support from the SADC of Témiscouata. In 2009, to diversify its activities, the CHPV seized the opportunity to put into operation a maple grove with 25,000 syrup taps. It s innovative approach in choosing to use a wood pellet-fired maple sap evaporator was a first in the Bas-Saint-Laurent region. CHPV was able to undertake this important diversification project thanks to the help of a $ 50,000 loan from the SADC of Témiscouata. As with any business enterprise, GHPV s expansion efforts did not come without some growing pains. But, once again, with the financial assistance the coop received from its local Community Futures office working with other partners in the region, GHPV was able to engage a consultant who helped its management team deal with their business challenges. Today, the forest cooperative employs 77 workers who are involved in a wide range of activities including logging, pre-commercial and commercial thinning, preparation of land for reforestation, tree planting, forest inventory management, construction and maintenance of logging roads. 9
What Do We Recommend? 1. Funding and Capital Social Enterprises earn revenue and create jobs like any other business. And like any other business, they need capital and technical advice to help them start and grow. We recommend the establishment of a Rural Social Enterprise Capital Fund, accessible to CFOs, that would enable them to provide financial assistance of up to $300,000 to economically viable social enterprises at favourable interest rates. 2. Capacity and Skills Development Federally-funded innovation and business supports are not consistently available or promoted to social purpose organizations, with access to these supports even more challenging for rural and remote communities and marginalized people. We recommend the establishment of a Social Enterprise Advisory Initiative to enable CFOs to assist social enterprises in accessing the special expertise they often require to start, expand or grow a social enterprise. This type of support has proven to be a very effective tool for the CBDCs in Atlantic Canada and it could serve as a model for replication across the country. 10
What Do We Recommend? 3. Knowledge Transfer, Data and Impact Measurement Appropriate metrics to effectively measure the full impact that the growth and development of social purpose organizations actually has on a community s vitality is seriously lacking. Additionally, there is no common approach to measurement by the various support agencies involved in social development activities. We recommend the involvement of CFOs in the development of national-level data sets of Social Enterprise Performance Measures. 4. Mobilization and Awareness Low awareness inhibits social purpose organizations from attracting funds, buyers and other partners. We recommend launching a Social Enterprise Awareness Campaign in rural and remote communities using the reach of the 267 CFOs across Canada. 11
Recommendation # 1: Rural Social Enterprise Capital Fund Problem: Social Enterprises have unique financing needs: they can be competitive with traditional SMEs, but may have limited revenue streams, higher costs to meet social outcomes and insufficient collateral security for traditional lenders. As a result, they need access to innovative and unique approaches to affordable, long term capital to achieve sustainability. Opportunity: The CF Program terms and conditions allow CFOs to provide repayable loans to SMEs including social enterprises, up to $150,000 and CFOs may charge lower interest rates to social enterprises than the prime plus 2% designated for SME financing. CFOs are encouraged to engage in special initiatives with other partners and to pursue a wide range of opportunities for specific client groups such as women, youth, indigenous people, and persons with disabilities. Recommendation: Designate a Rural Social Enterprise Capital Fund of $40 M to accelerate lending and leverage partnerships with CFOs by offering access to up to $150,000 in matching financing. The designated patient capital would be administered by CF Provincial Associations and invested through local CFOs in sustainable social enterprises which respond to specific challenges facing rural communities. 12.
Recommendation # 2: Social Enterprise Advisory Initiative Problem: Because of the nature of their activities, in addition to conventional business management skills, social enterprises need to build their capacity to address unique, sometimes complex challenges as they start and grow their organizations. While CFOs are able to provide a range of business counselling and information services to SMEs, they may lack the ability to provide the special expertise that often is required by social enterprises. Opportunity: CFOs in Atlantic Canada have successfully fostered the growth and sustainability of their clients by providing access to targeted training and/or consultancy funds that increase the recipient s capacity and knowledge base. Recommendation: Create a Social Enterprise Advisory Initiative Fund for social enterprises that would enable them to hire outside expertise to assist in building their capacity in areas such as board governance, management skills, diagnostic assessment of their organization and other related topics. The fund would be administered by the CF Provincial Associations and modelled after Atlantic Canada s Consultant Advisory Service Initiative where CFOs pre-qualify a local social enterprise for up to $5,000 in grant funding to purchase professional training. 13
Recommendation # 3: Social Enterprise Performance Measures Problem: Social enterprises are created to achieve social, cultural or environment aims through their business activities, but many struggle to measure progress against these goals. There is a growing set of tools to benchmark social value and social enterprises are eager to measure their impacts on the community with the same precision that they track their business operations. However, appropriate metrics and evaluation processes are lacking in this regard. Opportunity: CFOs across Canada have a long history of reporting on performance measures on the clients they serve. Many of these metrics have been negotiated with federal funding agencies to reflect current priorities. Adding social impact measurement tools and practices would greatly improve our ability evaluate the results achieved through a national social innovation and social finance strategy. Recommendation: Involve CFOs in the development of a national set of social enterprise impact measures that CFOs would then incorporate into their annual performance measures. 14
Recommendation # 4: Social Enterprise Awareness Campaign Problem: Social enterprises are an evolving business model that have the ability to change purchasing patterns, supply chains and public attitudes. Public awareness of the benefits of social enterprises is often limited to the direct experience a consumer has with a particular social purpose organization. Opportunity: CFOs operate in 267 rural and remote communities with more than 3,000 volunteers and 1,400 staff who promote the valuable contributions of SMEs to diversifying the local economy. The rising use of social media encourages the integration of common messaging across CFOs in Canada. CFOs have developed a network of online communication tools through which they can promote a variety of market access opportunities to social enterprises. Recommendation: Develop a public awareness campaign to promote the value of supporting social enterprises and engage CFOs to deliver the messaging in rural communities. 15
Thank You This document was prepared on behalf of the Community Futures Network of Canada by: Diana Jedig, Executive Director Community Futures Ontario 519-494-6982 djedig@cfontario.ca Erinn Smith, Executive Director Nova Scotia Association of CBDCs 902-883-4798 erinn.smith@cbdc.ca Tony Stolz, Executive Director Community Futures Alberta 403-851-9995 tstolz@albertacf.com Ron Trepanier, Executive Director Community Futures Network of Canada 778-839-8602 rtrepanier@communityfuturescanada.ca 16