Starting point: Impact investing for public policy
Who is active in this space in Canada?
In British Columbia, the BC Social Innovation Council was established to assist the provincial government in seeking new and innovative ways to help local communities tackle the most intractable social challenges of the day. The Council made 11 recommendations focused on five key areas:
- Supporting social enterprise
- Legislative enablement
- Social innovation labs
- Engaging communities
- Learning and research
In Manitoba, Deliberate Economics is lobbying for a new type of corporation where the share capital arrangement would be specified around a clearly articulated corporate purpose. This form of corporation, Deliberate Economics calls a “specified share capital corporation” or SSCC, would differ from a regular share capital corporation in the following ways:
- The payment of dividends to shareholders would be specified, and payments would be made on the basis of the corporation’s achievement of its extra-monetary purpose and goals.
- It would have to publish an annual report, to be approved at its AGM, that would account for its performance with regard to its purpose and goals.
- When revenues exceed $500,000, it would be required to produce audited financial statements.
- If dividends were to be paid out to shareholders, an intensive forensic audit would be required (which can examine non-financial assets and activities of the corporation, and thereby verify accounts of the corporation’s purpose and goals will be required if dividends are to be paid out to shareholders.
The Ontario Social Economy Roundtable, an affiliation of networks and organizations focused on supporting the province’s social economy, has published four social finance policy papers:
- Proposal for a provincial tax credit to support investment in Ontario’s social economy;
- Provincial initiative to expand the mandate of infrastructure in Ontario’s loan program to allow applications from all eligible nonprofit organizations;
- Provincial initiative to create policy framework and legislation to support community bonds; and
- Proposal for a provincial tax credit to support investment in Ontario’s social economy – Registration of Investments
Learn more at the The Canadian Community Economic Development Network
What are the critical issues for policy makers?
As defined by the Canadian Task Force on Social Finance in 2010, three areas that need attention from policymakers:
- Mobilizing capital
- Creating an enabling tax and regulatory environment
- Building the investment pipeline
- Mobilizing Private Capital for Public Good link
- Social enterprise in Canada: Structural options
- Impact at Scale: Policy Innovation for Institutional Investment with Social & Environmental Benefit.
For more information visit resources and the ‘public policy’ tag.
What impact measurement tools are in use today?
There are a range of approaches being used in impact measurement, but in the current context of impact investing, the two most common ones are versions of the following:
- Social Return on Investment (SROI): A principle-based approach to understanding and managing the value of the social, economic and environmental outcomes created by an activity or an organization.
- Global Impact Investing Ratings System (GIIRS): A means to measure the social and environmental impact and practices (but not the financial performance) of companies and funds. It uses a rating system analogous to Morningstar’s investment rankings or Standard & Poor’s credit risk ratings. GIIRS is based on the Impact Reporting and Investment Standards (IRIS) metrics, a set of standardized measures for describing social, environmental, and financial performance.
(PDF) CATALOG OF APPROACHES TO IMPACT MEASUREMENT by Social Venture Technology Group, May 2008 (more comprehensive)
(PDF) Measuring and/or Estimating Social Value Creation: Insights into Eight Integrated Cost Approaches by Melinda Tuan, December 2008
(PDF) An Overview of Approaches to Impact Measurement by the Grassroots Business Fund,
A Guide to Social Return on Investment, January 2012
For more information, visit the resources and the ‘social impact metrics’ tag.
What is outcomes-based financing and what are social impact bonds?
Outcomes-based financing (also known as payment-by-results or pay-for-performance) is a form of financing projects whereby payment is made on the basis of proven improvement in social outcomes. There are several different ways in which outcomes-based financing contract can be structured for social finance.
A social impact bond (SIB) is an impact investing model used to increase the level of prevention investment in niche social areas. It is emerging as a tool that governments are exploring to help attract private capital for public benefit, and that not-for-profit organizations are evaluating to diversify their sources of revenue.
For more information, see the FAQ section of the page on social impact bonds at SocialFinance.ca and visit resources and the ‘social impact bonds’ tag.