I remember reading the story about the unique partnership that created Grameen Danone in Building Social Business by Muhammad Yunus - and that set off fireworks in my head! Inspired by these joint-venture possibilities, I looked at what we were doing at DreamFund Holdings and explored innovative hybrid business and investment models we could leverage to address our most pressing social issues with market-based solutions. We call them DreamFunds.

While we all eagerly await the materialization of recommendations made by the Canadian Taskforce on Social Finance to unlock more investment into this space, our social issues are mounting and our social entrepreneurs find themselves stuck in the missing middle.

With all the hurdles social entrepreneurs face in the start-up phase, especially where significant capital and expertise is required, it could make more sense to partner with established corporate entities who share their social mission. Virtually untapped, strategic joint-ventures such as these allow social entrepreneurs a way forward and create more opportunities for impact investors to realise the often elusive dream of social impact and financial returns.

So, since necessity is the mother of invention, we took a serious look at the possibilities of fostering collaboration between established corporate entities and social entrepreneurs to bring social impact solutions to market more quickly, elegantly and with the potential for scale.

While our core activity at DreamFund Holdings is to ‘create wealth through real estate’ for our investors, we provide another way to ‘give back...and get back’ as impact investors through our Social Ventures Unit. We structure joint-venture models to share returns from our investment projects with social entrepreneurs as a way to fund their social mission.  Our shared market rate returns are a way impact investors can realise profitability in the social venture as shareholders - at least during the ventures’ critical and usually ‘unprofitable’ start-up years.

One early adopter of DreamFund Holdings’ joint-venture model DreamFunds is the University of Toronto’s Transitional Year Programme (TYP), which is committed to making university education accessible to disadvantaged persons through a bridge program and was at risk of being cut after 41 years because of funding challenges.

Another is Quagga Designs, a global furniture company that is interested in launching a Social Missions Unit to share corporate talent and innovative technologies beyond charitable transactions.

Here is a video featuring these clients:

The UofT TYP DreamFund uses the pooled investment of program supporters in much the same way as an endowment fund would – but with a twist, it offers a financial return instead of a tax deduction since the supporters are investors, not donors. The TYP DreamFund invests the capital raised into principal protected, local real estate projects for a specific term and specified annual rate of return paid quarterly. The dividends are used to fund the Transitional Year Programme and provide market rate returns to impact investors. As long as the initial capital is re-invested, these returns continue in perpetuity, so that the Transitional Year Programme no longer needs to seek funding or risk being discontinued. Funding crises solved!

The Quagga DreamFund leverages a percentage of sales revenues and program investment from supporters to get it started, by forming a joint-venture private company offering investors shares in the corporation. The capital from the issuance of shares is invested in real estate, with specific terms and yield.  Dividends are then shared, going towards funding the Social Mission Unit and the shareholders. Social innovation accelerated.

If joint-venture models like DreamFunds are able to solve the funding challenges of social ventures too large for microcredit and too small (or not lucrative enough) for traditional venture capital, should we not investigate more ways that established corporate entities can partner with social entrepreneurs to advance the social finance industry and attract impact investment?

Because sometimes, as the saying goes; if the mountain won’t come to Muhammad...

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