Speech Article from
Speaking Points for the Honourable Diane Finley to launch the National Call for Concepts for social finance at the 5th annual Social Finance Forum
the Honourable Diane Finley
Minister of Human Resources and Skills Development
to launch the National Call for Concepts
for social finance
at the 5th annual Social Finance Forum
November 8, 2012
Check against delivery
Good afternoon, and thank you for that kind introduction.
I would like to offer my sincere congratulations to today’s award winners and my thanks to MaRS for hosting and planning this wonderful two-day forum.
As I get underway, I want to start with a story that I told at the Manning Centre Conference last year, when discussing our Government’s interest in social partnerships and finance.
A shopkeeper in a smaller town was dismayed when one day, a brand new business much like his own opened up next door and posted a sign which read ‘BEST DEALS’.
He was horrified when a few weeks later, another competitor opened up on his other side and announced its arrival with an even larger sign, reading ‘LOWEST PRICES’.
The shopkeeper panicked about how his business could possibly survive…until he got an idea.
He put the biggest sign of all over his own shop...it read ‘MAIN ENTRANCE.’
Now I tell this story because it relates, in a way, to what I want to talk to you about today…the largely untapped goldmine of potential for innovation and the resilience of local communities.
And also…how things need to change.
So let’s get started. It is absolutely fantastic to see so many leaders and experts and trailblazers sitting here today.
And you’re all here in Toronto to help Canada become better.
I have to tell you folks…these are exciting times when it comes to social partnerships in Canada.
Attitudes are shifting. People are coming up with creative new solutions to what often seem impossible challenges.
It is why events like this are attracting some of the brightest minds from across Canada and around the world.
It is why MaRS took the leap of faith and announced the creation of a National Centre for Impact Investing to act as a social finance hub.
I don’t have to tell all of you that, not so long ago, it would have practically been heresy to speak of the financial investment marketplace and social challenges in the same breath…as if, essentially, the two concepts were diametrically opposed.
Today though, as we continue to struggle with social and economic challenges that appear to defy resolution - think of homelessness, youth crime, and persistent unemployment - we recognize that we must look at new ways to unlock innovation in local communities.
While some traditional approaches to these challenges have made important advances over several decades, we can do more.
And we must do more. But the key is to do it differently.
Let me give you an example on this.
When I first was appointed Minister of HRSDC in 2006 and I asked the Department how many homeless we had in this country…I was told 150,000.
Three years later when I was appointed once again as Minister of HRSDC, after spending time as Minister of Citizenship and Immigration, I asked again how many homeless and was told 150,000.
Good work had been done – but no real dent had been made.
Now let’s be clear on one thing. There are many sincere and dedicated individuals who are working very hard to solve our social problems.
They range from governments, to professional organizations, to not-for-profits, to thousands of volunteers just wanting to make a difference.
Our Government’s role though is to work with our partners to create more empowerment… empowerment of individuals and communities to further address our challenges.
To do so, we have to broaden our horizons and think outside of the box to leverage new avenues for solutions.
From a government perspective, social finance can maximize the return on taxpayers’ money… and all of the energy and resources we invest… in addressing social challenges in this country.
But I would take that a step further. To me, it’s about finding new sources of capital. It’s about responding to social goals by harnessing private sector best practices and helping scale-up disruptive innovation.
I truly believe that the willingness to serve already exists – we just need to channel it better.
Now I don’t want to alarm anyone here, but I have to tell you a secret: governments don’t have all the answers.
We can’t do everything. Really!
And quite frankly, we shouldn’t do everything.
That’s probably not a secret to all of you here – but it still is to many out there.
After all, as Ronald Reagan once said:
“The nine most terrifying words in the English language are: I’m from the government and I’m here to help.”
But folks, here’s the straight talk: we can’t fund every single, solitary service that people want, without regard for the taxpayers’ ability to pay for it.
So it’s time to shift gears.
It’s time for us to unleash individual initiative so that those who are motivated can help others…and those who need help are given the opportunity to take more responsibility for themselves.
It’s really community leaders who can best understand their local challenges, identify solutions and get results.
This is why it is so important for us to work better with business and voluntary sectors, foundations and not-for-profit groups. That’s the goldmine I’m talking about – and the one we need to tap into.
Here’s an example that MaRS has actually used in explaining social finance at work:
A community foundation may extend a grant to an enterprising non-profit who wants to address homelessness in their community. But they extend the grant in order to intentionally attract a repayable loan from a more traditional investor.
The foundation would expect that homelessness be decreased by a certain percentage. That’s its return on investment.
The traditional investor, on the other hand, expects a financial return or repayment.
With this arrangement, which may or not involve federal funding, the organization can repay the loan because of the community fund’s grant.
And the grant from the community fund has been strengthened has been given ‘legs’ as MaRS stated – because the results from the organization have been bolstered beyond the monetary value. Over the last couple of years our Government has been moving forward on the social finance front.
I established an advisory panel on social partnerships and social finance. I have been tremendously encouraged by the hard work, energy and enthusiasm of this group of leaders – and want to publicly thank them for their ongoing efforts and valuable advice.
We have reviewed a number of the activities happening internationally regarding social finance.
While in London, I met with a number of global social finance leaders, to learn about their experience with Social Impact Bonds.
As most of you know, this is a contract between the government and private investors where the private investors provide up-front capital to finance an organization –often a not-for-profit – to deliver a social program.
Payment from the government is tied to program outcomes. If – and only if – the agreed-upon outcomes are achieved, the government pays the investors the agreed premium, as well as the original investment.
We are now looking at potential barriers at the federal level that would prevent key groups from investing in these social impact bond-type projects.
We also want to test investors’ temperatures for risk-taking and the best way to involve service delivery organizations.
More broadly, we are exploring different kinds of innovative funding arrangements that are key to a broader Social Partnerships strategy.
Let’s use Food n More in Calgary as an example.
Food n More is a coalition of 25 agencies formed in Calgary in 2007 that reduces the cost of buying food by 20-30% for groups who serve vulnerable populations. They do so by using coordinated purchasing, centralized warehousing and extensive community partnerships.
One of the required functions of Food N More is front-line service delivery of 1,000 volunteers who deliver food hampers across the city.
This summer, our Government announced $500,000 to develop and implement a new “Work Smarter” training program that will be used to recruit and train 1,000 volunteers.
Participants will learn how to provide enhanced in-home services to vulnerable clients by linking them, based on their needs, to the support services available in their communities.
To match the Government's contribution, the organization will raise funding through new partnerships with the private sector and individual donors.
This is just one example of how we are encouraging the development of new partnerships between communities and the Government while maximizing the impact of federal spending by leveraging private-sector resources.
We have already started pilot projects to test new ways of funding solutions to complex social challenges.
We’re also looking at simpler – “single-window” agreements to make it easier for organizations to interact with government and access funding…while reducing the administrative burden.
Call it “one-stop-shopping” with government, if you’d like.
We are beginning to implement pay-for-performance agreements that stipulate for payment to be made only when specified results have been achieved.
And we’re also looking at ways to encourage not-for-profit organizations to find new sources of funding that can complement federal funding.
In our Economic Action Plan 2012, we made a commitment to continue to explore social finance instruments as a way to encourage the development of government-community partnerships.
When our Government makes a promise, we keep it…and that is why I’m here.
Today I am pleased to announce – right here, right now – the official launch of a National Call for Concepts on Social Finance.
It’s our first, official step in inviting your ideas to the table that can help shape future social policy in Canada – in a new way.
I want to solicit the best ideas that Canadian innovators have to offer, so that we, as a federal government, can chart our path forward on how to support social finance.
And I want to identify new partners and better shape our existing programs to support innovation.
I want to use this opportunity to better understand what organizations and individuals think we can do with social finance – and hopefully use this as a springboard to launch a call for proposals, or identify some promising pilot projects.
Specifically? We’re looking for what the social or economic issues are that you would want us to address in new way. We’re looking for creative partnership ideas such as the Food N More example.
Many of you here today are the experts in the field. And that is where I issue the challenge – and the request – for your help in achieving our common goals.
We need your input on how we can best make measurable improvements that will benefit those in need.
This is a tremendous opportunity for you to contribute to social policy and how the federal government shifts the way we operate and do business.
This is an opportunity to use your expertise and your networks to help your communities.
We will begin accepting submissions through a website – that is launching today. The call is open until the end of the year.
It is clear that a new approach to funding is required.
An approach based on collaborative efforts and shared results…
An approach that integrates social and business goals, instead of segregating them…
An approach that looks beyond traditional donations and more to strategic investments that deliver measurable impact…
An approach that gives a fair chance for community and local innovation…
An approach that is rooted in the principles of efficiency, transparency and partnership…
To accomplish this, we need the continued public service of people like you.
So, I would ask all of you here to use your networks and spread the word. Go on our website and provide us with your best ideas.
Our Government is looking to achieve different – and better – results for Canadian taxpayers, which means we need to look at how we do things.
That’s why I am excited about the outcomes of this forum – and also about continuing to build on the momentum around social finance.
I hope that, together, we can identify new ways of working together and towards an even stronger Canada.
Thanks very much.