This document discusses social finance and impact investing. It provides background on issues like an aging population, environmental degradation, and economic instability. It then discusses how money and capital can be used as tools to address social and environmental challenges. The document outlines different forms of social finance like venture capital funds, community development funds, and debt mechanisms. It also provides examples of how impact investing has been used to support affordable housing, international eye care, and conservation in Canada. The conclusion discusses how bringing together capital and communities could mobilize over $100 billion for social causes and change whole systems.
9. “Money plays the
largest part in
determining the course
of history.quot;
- Karl Marx
10. “Money is only a tool. It
will take you wherever
you wish, but it will not
replace you as the driver.”
- Ayn Rand
CAUSEWAY: a national collaboration
15. Capital Flow TAX INVEST
Individuals
Government Organizations
Financial Entities
SOURCE -> - managing other’s money
DIRECT
ORGANIZATION ->
USE -> Operations
Programs
Assets
16. It begins with a conversation…
• Aligning interests to create innovative solutions
Constructive Dynamic
R
eq
Source Perspective
n
Use Perspective
ur
ui
re
et
m
R
en
ts
ns
o
i
t
ic
R
tr
is
es
k
R
Constrictive Dynamic
CAUSEWAY: a national collaboration
17. … results in specific products
• 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.
CAUSEWAY: a national collaboration
18. … and can change whole systems.
• Coming together of the great catalysts
– capital + community
• Great Bear Rainforest (2 million hectares)
– Start: environmentalists + lumber companies get together
– 2001: private foundations + BC premier’s office -> 1st nat.
– 2002/3: determination of ecological value and economic pot.
– 2007 Outcomes:
• $120 M across 2 funds: $30 M fed, $30 M prov., $60 M private
• Provincial government actions
– New ‘ecosystem based’ land management regime (3x PEI)
– New park designation for ecological protection
• Collaborations
– Collective land-use agreement among prov. gov’t and first nations
– North coast first nations collaborating (e.g. joint marketing and distribution of fish)
– Shared governance between private, first nations, government
CAUSEWAY: a national collaboration
21. The Future of
Social Capital Markets
Katherine Fulton
October 2008
MONITOR INSTITUTE 21
22. How Big Could it Be?
U.S. Philanthropy
$0.31 Trillion
Impact Investing in 5–10 years?
Negatively Screened Funds + Impact Investing
$2.71 Trillion
All Investing
$61.90 Trillion
Impact Investing has the potential to grow to ~1% of total
managed assets, which could result in ~$600B of capital
channeled towards social and environmental impact
MONITOR INSTITUTE 22
23. A convergence of actions
Create industry defining funds as a
beacon for how to address specific
social issue(s)
THAT’S
Place substantial catalytic, risk-taking
capital in mezzanine finance structures
HOW IT
Coordinated
COULD
Leadership
Develop impact investing network
TAKE
OFF
Set the industry standards for social
measurement
Lobby for specific policy / regulatory
change
MONITOR INSTITUTE 23
24. Canadian Context
• Limiting regulatory framework
• Income Tax Act and charity law
significantly constrain flow of capital
• Strong non-profit sector
• $120 B annual expenditures
• >7% of Canada’s GDP
• Non-profit income sources
Above average growth
• 1.5 M workers + 0.5 M volunteers
•
Corporation
Gifts
Individual
2nd largest in world per capita s
5%
Donations
3%
8%
• Internationally significant
• Resourcesenergy, forests
Government
49%
Earned
•Examples
Water, Income
• Great Bear Rainforest
35%
•
25. Design Breakouts
Approach
• A change in conversation
• A change in flow
Application
• Investments
• Products
• Systems