There are often gaps between theory and practice in new and emerging areas, and often it is theory struggling to catch up with developments on the ground. Given the relatively nascent state of play around social finance in Canada, I would propose that this description fits accurately. A positive sign, however, is  the emergence of more Canadian-focused academic literature on social finance, as was recently the case at the Association for Nonprofit and Social Economy Research (ANSER) conference in Montreal.

The conference showcased a number of panel sessions specifically on social finance and social enterprise, and provided a window at the emerging state of academic and practitioner research on these issues. From my perspective, there was a good blend between theoretical and practical elements within the range of presentations, and a fairly good level of understanding of the importance of aligning the needs of academics and practitioners – often not a straightforward task.

Tessa Hebb took on the task of organizing two panels showcasing some of the leading academic research taking place on social finance from across the country. My presentation kicked off the first session, where I had the opportunity to present on a paper co-authored with Tessa, titled “Investing for Impact: Issues and Opportunities for Social Finance in Canada”. Our paper describes the trends, opportunities and issues facing social investors, based on research and primary interviews with new and established players. I won’t elaborate here on our findings, as you can read the full paper, which builds on our earlier writing around the same themes. 

Margie Mendell, one of the leading experts on social finance in Canada, presented next on social finance in Quebec. Her comprehensive presentation described the range of instruments and strategies that have been developed and applied in Quebec, and how the state of social finance in Quebec has evolved. Margie was able to provide an excellent balance between academic comprehensiveness and practitioner relevance around the lessons and implications for Quebec and other Canadian provinces.

Even though I would describe the overall Canadian social finance marketplace as being relatively immature, the sheer range of instruments, organizations and strategies employed in Quebec elevates it to being the leading Canadian province in this regard, and I would argue even a global leader. A key point that I picked up on was that even though the provincial government invested heavily in the infrastructure and capacity of the organizations that make up the social capital market, it was done through co-construction (“concertation”) of agendas, institutions and policy with multiple stakeholders. It remains to be seen, however, if we can demonstrate this level of collaboration in other provinces.

Francois Brouard’s paper titled Earned Income for Financial Self-Sufficiency examined the various dimensions and issues regarding earned income in Canadian registered charities and nonprofit organizations. For charities or nonprofits that are considering social enterprise, this paper is useful reading in order to gain a better understanding of the basic concepts around the types and sources of funding, and how earned income is treated under the Canada Revenue Agency (CRA) guidelines. If you’re just beginning to think about these issues, you should also consult the various publications by Stacey Corriveau, Terrance Carter and Theresa Man, Mark Blumberg, and SiG@MaRS.

George Karaphillis from Cape Breton University presented the preliminary findings of an extensive survey on the financing of the social economy in Atlantic Canada. The survey examined how social economy organizations access and use external financing, and provided some interesting insights into the motivation, behaviours and trends around social finance at a grassroots level.

One notable example is the stark difference between the perceived and actual challenges around access to finance – most organizations did not feel that their business plans, internal management capacity and financing applications were significant barriers; yet the (potential) suppliers of financing rated those areas to be of significantly higher concern. This highlights the continued challenge of defining the absorptive capacity and investment readiness of social economy organizations (an issue that many social enterprises continue to struggle with when attempting to access finance). The social enterprises analytical and financial analysis tools developed by RISQ are one of the few comprehensive frameworks I’ve come across that seeks to evaluate the needs and capacities of social enterprises in a consistent manner.

The afternoon session had a number of presenters, including Ted Jackson from Carleton University who presented on an evaluation of the micro-loan program managed by Alterna Savings. Heather Hachigian from the Carleton Centre for Community Innovation presented her findings from a case study on the University of Toronto’s investment policies for their pension and endowment funds.  Heather’s previous work around provide a snapshot of the policies (or lack thereof) around integrating economic, social and governance (ESG) criteria in the investment decisions of university pensions and endowments. I believe that this is an opportunity for universities to re-evaluate, in the wake of the financial hit they have taken in the recent past, how their investment decisions can be more consistent with their broader (social) objectives and responsibilities to the communities in which they are situated and in which their students will influence.

Another panel session the following day, which I had the pleasure of moderating, included 2 presentations on social enterprise. The first, by Ushnish Sengupta, examined the opportunities and challenges faced by CyberEquality, a grassroots social enterprise from the junction neighborhood of Toronto. Even though the organization is in the very early stages of its lifecycle, the document challenges of creating a sustainable business model and governance structure continue to rank highly among the key issues that both early-stage and more established social enterprises face.

The second presentation by Kate Ruff from Charity Intelligence (Ci) reviewed Ci’s 2009 analysis of Canadian social enterprises, describing key successes and challenges from their rigorous screening process. In addition to providing targeted examples of the key issues from undertaking such an exercise, it also brought up some key areas that social enterprises need to strengthen – namely, clearly articulating a theory of change, and a well-defined set of management strategies and practices. Visit their website for more information on their 2009 Recommended Charities report and the recommended social enterprises: Eva’s Phoenix Print Shop, TurnAround Couriers, Inner City Renovation, and Gateway Linens (full disclosure: both ICR and TAC have received investments from Social Capital Partners).

To summarize, there is much happening around both the theory and practice of social finance in Canada. The number of academic centres that are actively studying the topic continue to grow, and you should keep checking back on these institutions if you’re interesting in pursuing academic or action-based research:

• Carleton Centre for Community Innovation (Carleton University)
• Canadian Centre for Social Entrepreneurship (University of Alberta)
• Sprott Centre for Social Enterprises (Carleton University)
• ISIS (University of British Columbia)
• Ivey School of Business (University of Western Ontario)
• Schulich School of Business (York University)
• SiG@Waterloo (University of Waterloo)
• Social Economy Centre (University of Toronto – OISE)
• Social Enterprise Initiative (University of Toronto – Rotman)

For international academic institutions, a comprehensive listing can be found on the University Network site, including their Handbook on Teaching Resources.

Finally, please let me know if I’ve missed any institutions or academic centres from the list above by commenting below, and I’ll add to the list accordingly.

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