A gap between the capital sought by social enterprises and the capital supplied by the market may dampen sector growth. To maximize jobs, revenue and social good, policy-makers must know if a capital gap exists and, if so, at what size.

We wrote this paper to help fill those blanks. We report the findings from a survey of 696 Ontario for-profit companies that claim a social purpose. In the survey, we asked respondents how much capital they sought in 2016 and how much capital they actually raised. From those numbers, we calculated a 2016 capital gap of $45 M. We found that companies earning revenue were more likely to meet their capital targets than companies not earning revenue. We also found that companies with environmental goals were more likely to meet their targets than companies with social goals.

We acknowledge the limitations of self-reported capital demand. We therefore interviewed three entities that invest in Ontario’s for-profit social enterprises. These investors validated the gap between demand and supply. All three saw room for more money in the market.

In sum, our data show that a segment of for-profit social enterprises believe that Ontario’s social capital market offers too little investment to optimize growth. Capital to bridge that gap could yield better economic, social and environmental outcomes for Ontario.

Published in 2017

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