Canada’s 2010 Social Finance Task Force and Social Enterprise
Canada’s Task Force on Social Finance proposed capital, policy, and training changes while mapping organizations from charity to business.
Canada’s Task Force on Social Finance set out ways Canada could use private capital for public good. Its December 2010 report placed social enterprise within a broad range of organizations, where social and financial returns could overlap.
The task force report
SiG, short for Social Innovation Generation, established Canada’s Task Force on Social Finance. In December 2010, the task force released Mobilizing Private Capital for Public Good.
The report focused on public good and private capital together. Its approach did not treat charitable work and commercial activity as completely separate worlds. Instead, it described organizations that could have differing mixes of social impact and financial return.
Katherine Fulton of Monitor Institute was among philanthropy and social innovation leaders who sent congratulations to the task force by video. SiG @ MaRS posted that video on Vimeo.
Three areas for government
The report called on Canada’s government to take action in three distinct areas. Each addressed a different part of the conditions needed for social finance.
- Capital mobilization meant opening new sources of money for public good, including foundation endowments, pension funds, and government first-loss capital.
- A more enabling tax and regulatory environment would make it easier for charities and nonprofits to establish revenue-earning enterprises.
- An investment pipeline would provide social entrepreneurs and enterprising nonprofits with business training to launch, run, and grow ventures.
These recommendations connected capital, rules, and practical operating knowledge. Capital alone did not address whether an organization could start an enterprise, and permission to operate did not by itself provide the skills needed to expand one.
A range of organizations
The report included an organizational spectrum adapted from Charities Aid Foundation Venturesome’s 2010 publication Financing Big Society: Why social investment matters. The spectrum began with organizations centered entirely on charitable operations and ended with a purely commercial enterprise.
In order, its eight points were:
- Operational charity
- On-mission enterprising arm of a charity
- Enterprising non-profit
- Co-operatives
- Social purpose business
- Socially responsible business
- Business giving a portion of profits to charity
- Pure commercial enterprise
A second scale ran beneath those categories. At the charity side, the return was social impact. At the commercial side, it was financial return. Organizations in the middle combined the two, creating blended returns.
The spectrum therefore did not create one hard boundary between social purpose and commerce. It showed several forms between a traditional charity and a business concerned only with commercial activity.
Where social enterprise fits
Front Porch Forum was a mission-driven for-profit business. Founded in Vermont in 2006, it was a mission-driven for-profit business that offered a free service and annually asked member households for voluntary payments of 10 to 100 US dollars.
The payments were neither charitable gifts nor tax deductible. People nevertheless asked whether Front Porch Forum was a charity or a business.
On the spectrum, Front Porch Forum’s founder positioned it between “social purpose business” and “socially responsible business.” That placement recognized both its mission-driven purpose and its for-profit structure.
Working through networks included looking across sector lines for resources that a social problem needed. The task force’s recommendations and spectrum reflected that same cross-sector view, linking charitable purpose, enterprise activity, training, regulation, and investment.