Causeway: MEIA Orienatation - 070625

Licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Canada License

CAUSEWAY a national collaboration

Social Finance OrientationMEIA Presentation

June 27, 2007Prepared by: Michael Lewkowitz, start-up coordinator

[email protected] -:- 416.607.5643

mailto:[email protected]

Licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Canada License 2

The sustainable flow of financial capital from sources to public benefit uses:

– Affordable Housing– Bottom of the Pyramid– Clean Technology– Community Development– Education– Fair Trade– Green Building– Health– Media– Microfinance– Social Enterprise– Technology– Disability Supports

What is “social finance”?

Individuals

Organizations

Government


Financial Entities- managing other’s money

How does capital flow?1. From the source

2. Into an organization

3. For use in either

Soc. P

urpo

se B

us.

Social

Ent

erpr

ise

Bus. A

rm o

f Cha

rity

Charit

y

Soc. R

esp.

Bus

iness

Busine

ss

Social

Commercial

Adapted from: John Kingston, Venturesome

Community Interest Companies

Government Organizations

Individuals

Operations

Programs

Assets

INVESTTAX

DIRECT


Collaborative approaches and blended returns Growing social and environmental pressures +

government and market failure = the conditions for innovation

3%

5%

8%

35%

49%

Corporations

Gifts

Individual Donations

Earned Income

Government

Canadian non-profit income sources

Government Business

Charity & Non-profit

Hybrid Space


Fields of innovation in social finance Blended Returns

– Spanning the continua of risk/return/focus

– Includes MBI and PRI• Well developed in the United States

– Social venture capital• A focus on the ‘hybrid’ universe• Well developed in the UK including

‘Community Interest Company’ legal structure and marketplace

Collaborative approaches – Complex requirements– Large asset classes

• Affordable Housing• Community Energy and Efficiency

High potential

social ventures

Fin

anc

ial

POTENTIAL RETURN

SocialAdapted from: Bridges Community Investment, UK

Low HighH

igh

Low

0

GuaranteesCash Cash

Senior Loans Fixed IncomePublic EquityPrivate Equity

Subord. LoansEquityGrants

Ris

k

Re

turn

Investment TypesBelow-Market Market -Rate

Adapted from : F. B. Heron Foundation


Provocative examples Venture capital

– Capital regional et coopérative Desjardins (CRCD) is a $500 million venture capital fund created in 2001 by the Desjardins Movement with the help of a provincial tax credit. Individual investors can invest up to $3500 a year in shares with a 50% tax credit. Shares must be kept for a minimum of seven years. Mission: to provide capital, expertise and access to networks for businesses and cooperatives in all Québec’s regions

Local community development– The Columbus Foundation used $2 million to seed an $18 million low-cost housing fund to

build 1,600 new units of affordable housing. Startup or expansion capital in underserved communities

– Deutsche Bank announced it will create an innovative $20 million investment fund to finance the expansion of eye care hospitals in developing countries. The Eye Fund I will provide loans and guarantees to support the development of affordable, sustainable and accessible eye care for the world's poor while providing a near-market return for investors

Debt mechanisms– Milestone achievement of $100m in loans to community finance institutions and social

enterprises by Calvert Foundation’s Community Investment Note Acquisition of assets

– BC Pension Funds – 21 BC-based union and management pension funds pooled $27 M to form Concert Properties in 1989 (originally named VLC) with the objective of financing affordable rental housing in BC, and creating jobs in the unionized construction industry. Today the 100% pension plan owned real estate corporation has $800 million in assets, with a track record of creating 10 million hours of on-site employment for unionized construction workers.


The social finance conversation Aligning interests to create innovative solutions

RiskRes

trict

ions

Requirements

Return

So

urc

e P

ersp

ect

ive U

se

Pe

rsp

ectiv

eConstructive Dynamic

Constrictive Dynamic


Example: Great Bear Rainforest $120 million private-public fund conservation fund Requirements

– Comprehensive ecosystem-based community perspective– Conservation + culture + commerce…

Restrictions– Brought parties together to develop the model– Included key stakeholders from the outset

Risk– Shared risk between private and public investors– Building community’s stewardship capacity

Return– Seeking a sustainable, blended return for the region– Exploring venture returns


Example: Disability Savings Federal program including DS Plan, Grant, and Bond. Requirements

– Deeply understood the funding requirements and need to broaden the community of funders

Restrictions– Worked within the existing tax framework and familiar

models– Expanded ability for people to participate

Risk– Reduced risk of the primary investor (government) by

encouraging private individual investment Return

– Created a return incentive to encourage others to participate


Example: Proposed Vancouver Homelessness LPfrom Vancouver Homelessness Funding Model Report



A national collaboration

working on new pathways

for financial investment

in public benefit.



Michael LewkowitzStart-up Coordinator

Phone:(416) 607-5643(778) 329-0021

Email:[email protected]

Tim Draimin Chair, Steering Committee

Phone:(604) 647-6611 x244(416) 481-8652

Email:[email protected]

CONTACT

Volunteer ContributorJenny Zhu: [email protected]

Causeway: MEIA Orienatation - 070625

Economy & Finance

Transcript of Causeway: MEIA Orienatation - 070625