Monthly Archives: November 2013

Resilient Capital Program

It’s that time of year again when the trees shed their ochre leaves and Christmas songs warm Toronto storefronts. It’s also a time when socialfinance.ca recognizes Canadian leaders in the social finance space through their annual Social Finance Awards. This year’s theme is Most Promising Collaboration and I had the pleasure of profiling the Resilient Capital program, a unique partnership between Vancity and Vancouver Foundation. Go ahead and vote here! or read on to learn more about the partnership.

The Resilient Capital program is a pioneering example of social finance in British Columbia. Developed through a partnership between Vancity Credit Union and Vancouver Foundation, the investment program helps accelerate growth in organizations that address social and environmental challenges.

Vancity-skyline

By connecting social enterprises with investment capital, the initiative enables social enterprises to deepen and extend their impact in their communities while offering a low-risk financial return to investors.

As of October 2013, Resilient Capital has invested over $4 million in 11 social enterprises. The financed ventures have since generated 250 new jobs, $3.5 million in earned revenue and $3.3 million in new investment capital.

The success of the program has captured the attention of social enterprises, financial institutions and foundations across Canada since its inception in 2011. I had the opportunity to speak with several partners, including Ida Goodreau, board member, Vancouver Foundation; Bill Hallett, VP Finance, Vancouver Foundation; Andrea Di Lucca, Community Investment Associate, Vancity; and Fraser Wilson, a term deposit holder and advisor, about the vision behind Resilient Capital.

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The Motivation Behind A Unique Collaboration

Vancity and the Vancouver Foundation are well-known leaders in British Columbia for supporting the development of healthy, vibrant communities. With 65 years of experience, Vancity is an expert in conventional lending and providing startup support to social enterprises. However, there was an opportunity to further direct the credit union’s assets and resources towards the financial needs of certain mission-based businesses, says Andrea Di Lucca, an associate at Vancity.

“There was a gap in the middle where we didn’t necessarily have all the tools or approaches to support the growth of social enterprises. This funding gap between start-up support and conventional lending was a missing link that we wanted to address in order to move social enterprises from startup phase to growth. We wanted to support social enterprises in becoming strong, viable businesses that would eventually be eligible for conventional financing.”

Meanwhile, Vancouver Foundation was looking to enter the social finance space. Ida Goodreau, a board member at the foundation, says the previous CEO, Faye Wightman, was a strong advocate for the development of Resilient and, more broadly, the need for new financial tools for social enterprises.

“While it was quite different than anything the Board had been doing in the past, Faye convinced us that this concept could fill a serious need [in the market] and this was a chance for the foundation to take a leadership role,” Goodreau said. “We knew we couldn’t do this on our own so the opportunity to partner with Vancity was a wonderful way to move forward into the social finance field.”

The partnership was a natural fit for the two organizations, which also share similar values like a strong belief in the power of innovation. Their leadership, coupled with Vancouver’s tight-knit group of community organizations, allowed Resilient Capital to quickly leap from idea to implementation. Goodreau describes it as “a real living laboratory bringing together a network of organizations meeting social needs.”

Building a Team to Leverage Private Capital for Public Good

Each organization contributed $1.75 million to the program up front but depended heavily on the broader community to commit the remaining investment capital necessary to launch Resilient Capital. The community’s strong desire to invest locally led to over $10 million in contributions from more than 20 term deposit holders. Depositors range from other community foundations to labour unions, post-secondary institutions, and individuals

This unique collaboration enabled each party to advance into unchartered social finance territory. Bill Hallett, Vice President of Finance at Vancouver Foundation, adds that joining forces helped create momentum to launch the program.

“There’s significant risk in going alone, especially in a space that requires patient capital, where the longer the horizon, the greater the risk. The fact that three parties are invested in the program helps mitigate that risk and allows us to achieve more together than we could apart,”

The Resilient Capital term deposit is 100 per cent guaranteed under CUDIC deposit insurance. Fraser Wilson, a term deposit holder, says the Resilient Capital product offered him a way to make a relatively low-risk investment, while supporting a social benefit, something lacking in the current impact investing space.

“I had sold my business and placed some of the money in capital markets in traditional, shallow and somewhat meaningless investments. It was a one-sided equation contingent on return-on-investment, not necessarily about what good is being done with your money,” Wilson said.

“As soon as I heard about Resilient, it piqued my interest. They fulfill a role of intermediary in that they both source and vet prospective social enterprises, and they provide security of capital. A very rare combination. I could now make an investment with a reasonable return, all the while know that my money was being used to solve some of society’s greater challenges and empower communities.”

Depositors have access to quarterly reports, which highlight both financial and social returns, so they can follow the progress of the financed social enterprises. Depositors are treated as collaborators and partners in the program, and have been engaged in the growth of Resilient Capital from the beginning.

Early-Stage Community Impact

The Galiano Conservancy Association is one of the social enterprises that has benefitted from the initiative. This additional financing has enabled the non-profit to build a restorative learning center, helping to further their mission to educate the public on environmental preservation. Other financed social enterprises are generating impact far beyond their original business plan. Through Resilient Capital’s investment, Climate Smart, an environmental enterprise working with businesses to measure and reduce their carbon footprint, has grown its client base to include social enterprises. Similarly, urban farming enterprise SOLEfood Farm works with social enterprise suppliers and community partners. The Resilient Capital partners were surprised to see this unexpected positive outcome of collaboration. “It’s becoming a much more integrated network, where social enterprises are engaging and supporting other social enterprises” Hallett comments.

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Galiano Conservancy Association

Collaboration is Critical to Social Finance in Canada

While the success of Resilient Capital holds new promise for impact investing in BC, all the partners agree that there is no model that will fit every social finance space in Canada. Goodreau emphasizes, “we have to continue to assess and use what we have learned in creating new initiatives. We need to deepen our understanding of how social enterprise can address the social needs within the community and how we can measure social impact.”

The Resilient Capital collaboration represents how diverse parties can come together under a unified vision—creating healthy, resilient communities—and still create a financial return for investors. Through incredible foresight and prudent risk taking, the partners have carved out a new reality in social finance. Most importantly, Wilson adds, “working with dedicated social enterprises has enabled Resilient Capital to marry money with meaning.”

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