Life on MaRS: Canada’s Social Finance Forum explores “the next big thing"

“I cannot think of a better place to talk about the government of Canada's approach to social finance and social innovation,” said Jean-Yves Duclos, the Canadian government’s social development minister, as he began a keynote speech to social investors and social entrepreneurs last week.

The place in question was MaRS Discovery District in Toronto, which, according to Google, is “one of the world’s largest innovation hubs”. On 9 and 10 November, it hosted Canada’s tenth annual Social Finance Forum.

Despite having been around for at least a decade, social/impact investment in Canada still has the feel of being the next big thing. Monsieur Duclos was in town partly because the Canadian government is in the process of developing a Social Innovation and Social Finance Strategy, to be launched next year.

Among the possible options being considered by strategy’s steering group is the creation of wholesale finance institution – like the UK’s Big Society Capital – to support the social/impact investment market.

Financing needs to be modelled around the problem and not investment returns

I was there to participate in panel chaired by Lauren Booker Allen of Omidyar Network addressing the question: ‘Can social finance serve everyone?’ alongside Mara Bolis from Oxfam America and Sacha Dichter from Acumen.

At least one audience member described our panel’s discussion as ‘spicy’, which may be a reference to the fact the panelists bucked conference convention by disagreeing.

The source of the spice was the issue covered in Mara’s recent article for Stanford Social Innovation Review about whether social investment can achieve both social impact and ‘market-rate’ returns.

While no one is disputing that making investments that support positive social impact while at the same time generating commercial returns is possible (and often happens within mainstream financial markets), the query was whether this is the most important priority for those who describe themselves specifically as ‘impact investors’.

During the panel Mara made the point that: "Financing needs to be modelled around the problem and not investment returns", while I talked about the UK experience of (perhaps inadvertently) prioritising the creation of a market for social investment above meeting the finance needs of charities and social enterprises.

Also inevitably on the agenda were social impact bonds and their sister product, development impact bonds (DIBs) – impact bonds in developing countries. The panel discussion about development impact bonds had the surprisingly restrained title: “Can impact bonds improve development?”

The wisdom of choosing the circumspect “improve” over the expected “transform” or “revolutionise” became clear during the discussion, as Justice Durland, an expert on these new products from Convergence, explained that the one of the key lessons learned about DIBs is that they can take three to five years to set up. Only one DIB has been completed so far and, while the data is patchy, it seems that it failed to meet its impact targets.

We're facing some big challenges in this country and we're much more likely to solve them if we work together and mobilise everyone

On social impact bonds, Nonprofit Finance Fund’s Antony Bugg-Levine delivered a keynote speech primarily focused on Pay-for-Success schemes in the US. His speech was mainly based on a book, What Matters: Investing in Results to Build Strong, Vibrant Communities, to which he contributed and he explained the shift in emphasis for beneficiaries of services: “In an outcomes-oriented project you're no longer an input, you're the sole purpose that the service is organised around.”

Alongside these social finance conference favourites, the conversation ranged further afield taking in Fintech and Clean Energy, while one panel discussion on “Can capitalism be inclusive?” seemed to focus significantly on how talented business people could be persuaded to build their careers in Canada rather than leaving to work for tech giants in Silicon Valley.

In Canada, perhaps to an even greater extent to the UK, there seems be a wide-range of perspectives on what social finance is and what’s it’s for, but MaRS got 500 people in some rooms to talk about it and most of them seemed to be getting something out of the experience. I certainly did.

Towards the end of his talk, Monsieur Duclos noted: “We're facing some big challenges in this country and we're much more likely to solve them if we work together and mobilise everyone.” This shows that, in Canada, as in the UK, social finance continues to give good quote as we try to turn our admirable – if often non-specific – aspirations into reality.