Investing responsibly a radical idea that’s gaining steam

Opinion

Hey there, time traveller!
This article was published 16/11/2016 (2326 days ago), so information in it may no longer be current.

About 80 people from disparate sections of society who wouldn’t normally spend the day together in a meeting room in the RBC Convention Centre did just that Tuesday.

The group included bankers (from varying management levels), officials from the Pallister government, private charitable foundations, the Winnipeg Chamber of Commerce, academics, street-level community workers, private equity investors and social enterprise managers.

It was the first Winnipeg Social Finance Forum. Access to capital for social enterprise was the topic of discussion.

The forum used language that was new to some, and there was the feel of an emerging movement.

The idea of social finance is not much different than that expressed by the B Corp organization in the U.S., which encourages for-profit entities to pursue a triple bottom line: people, planet, profit.

The idea of social finance or impact finance is that it can be broadened widely to include non-profit social enterprise and community economic development.

The assumption is there are willing investors and emerging pools of capital whose mandate is to make investments that will have a positive effect on the community at large and still produce returns for investors.

The relative success of accessing that capital can have a huge effect on the community. The discussion has evolved into one that includes a lot more sophisticated financial concepts for social enterprise groups than might have been the case 25 years ago. (The Pallister government is chewing over the idea of issuing so-called social impact bonds.)

To have any hope of accessing these social finance funds, bankers and fund mangers and advisers spoke about the need for social enterprise managers to produce more rigorous business plans and be willing to be more financially literate.

Sarah Leeson Klym, the Manitoba regional director of the Canadian Community Economic Development Network, one of the co-chairs of the event, said the social finance movement is an important new stage that needs to be addressed.

“I’m not a finance expert, I’m a community builder,” she said. “We are facing all kinds of massive challenges, and our communities are addressing them in interesting and innovative ways. We need to be more resilient and more organized to make change in the communities and regions.”

While she expressed concern grassroots groups, which lack resources and professional expertise, risk being further marginalized if they are unable to build the structure that the new capital requires, she knows every tool must be explored.

“I hear constantly that we just do not have enough resources to do the work that we need to, that the scale can’t grow, that we can’t sustain, that we are a bit unstable,” she said.

Andy Broderick, a VanCity credit union official, is also managing director of New Market Funds, a fund management company owned by non-profits that does impact investing designed to generate market returns.

He said organizations that do not have the resources can use intermediaries to provide translation, as it were, to these innovative new funding entities.

Lars Boggild, a manager with Toronto-based Purpose Capital, an impact investment advisory firm that helps mobilize capital to invest in social enterprises, said when it comes to investors in social finance, it is important to remember every kind of investment carries with it some amount of risk.

“What is important to think about is that this is investing, and like all investing, there is a whole spectrum of expectations when it comes to returns,” he said.

Officials from another Toronto company, Impak Finance, also attended. Impak’s ultimate goal is to develop a bank that will use the latest in financial technology and deploy its capital exclusively toward impact investing.

CEO Paul Allard, who was born in Winnipeg and has had a long career in technology startups, understands it is a radical idea but believes young Canadians are looking for something like this.

Listening to Allard, you can hear the passion. “There is a market shift,” he said. “We want to create a financial collaborative ecosystem, and the catalyst of this ecosystem will be a responsible bank, an impact bank.”

martin.cash@freepress.mb.ca