Category Archives: Impact Investing

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.

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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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Impact Investing: a human perspective

Ever since I heard the term impact investing at the 2011 Social Finance Forum in Toronto, I felt a connection to the phrase. Impact investing resonated with my notion of what finance should be – growing wealth while generating social and environmental value.

I have done a haphazard inquiry into the Canadian impact investing space, speaking with Sarona Asset Management, Purpose Capital and Pique Ventures.

Enduring Relationships
Last month I spoke with Bonnie Foley-Wong, president of Pique Ventures. Based out of beautiful Vancouver, Bonnie connects angel investors to social ventures with the intention of creating long lasting relationships. A motto of hers is:

“We believe in meeting people before you need to meet them”

This statement can be applied to all aspects of interacting with people. So often, particularly in business, we are taught to go into a conversation with an intended outcome – perhaps it’s a business card or an opportunity to self-promote. Whatever the motive may be, it doesn’t come from a place of organic listening and genuine curiousity. Pique Ventures facilitates these more people-centered relationships through hand picking a select number of investors and entrepreneurs to meet in an intimate setting.

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Considering Perception in Stonetown, Zanzibar

Holistic Decisions
I found an element of Foley-Wong’s philosophy particularly intriguing: people’s investment decisions are determined through analysis, intuition, emotion, and body. This holistic approach draws from the way we make every day decisions like grocery shopping. We don’t purchase just by analysis but also through how we feel, our own bodies and that indescribable gut feeling. As much as we try to draw clean lines between finance and the real world, just as we’ve done with much of business, government and non-profit sectors, the reality is much messier. Humans and our decision-making are far more complex. I think Foley-Wong’s investment philosophy boldly incorporates this.

Certainly the pioneers of Canadian impact investing like Bonnie are carving out imaginative new ways of thinking about finance. As a business graduate and global citizen, I believe it’s important to follow, engage and provoke these leaders if we sincerely want to see true financial transformation in the way our world invests its wealth.

walking the talk in impact investing

My first visit to the Centre for Social Innovation at Regent Park was uplifting. Upon entering, I took in the wide stretch of white space, colourfully accented decor, and hipster inspired furniture. Up a glossy elevator equipped with sleek security gadgets, and I’d arrived at the first community Impact Investing Fair, a room brimming with smiling faces and glowing with slight perspiration, thanks to Toronto’s infamous humidity.

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courtesy of Centre for Social Innovation, Regent Park

The evening began with a presentation from the charismatic “Sustainable Economist,” Tim Nash, who dispelled the mysteries behind impact investing. Swiftly cutting through clunky terms like portfolio, market risk and liquidity, Nash boiled down the essence of impact investing. Afterwards, a number of entrepreneurial investment funds pitched their cause and expected returns to the crowd (the end of this post lists some of the exciting investments).

There were many conversations that night that I would have loved to continue for lengthy coffee breaks. Though from different backgrounds, the people present spoke a common language, one that understood the value of putting their money into something worth investing for. Sure, your own financial security is important – but at what economic benefit are you willing to allocate your funds to blue chips or off to mutual funds? I feel that it is much like the clothes we buy, never once contemplating the supply chains of our jeans and jackets. Where is our money going?
Ignorance is bliss, but meaningful investment is better.

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Reading resource: “Impact Investing: Transforming How We Make Money While Making a Difference” by Antony Bugg-Levine and Jed Emerson

Impact Investing Resources
The term impact investing started to gain traction in 2009, with the establishment of the Global Impact Investing Network (GIIN). Since then, leading publications and groups have jumped in:

Dipping my toes in the water
With all this discourse on the glorious frontier of Impact Investing, I craved a reduction in talk and uptake in action. And this started with myself. Several months ago I finally stumbled upon an impact investment opportunity that met my investment needs. It happened serendipitously through a conversation with the CFO of MEDA (my previous employer) that they had a Risk Capital Fund. With a low minimum investment of $1000, returns of 2 – 4%, and high social-environmental investment standards, I had found my match.

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Agro Capital Management (ACM), one of MEDA’s investments. ACM sells and finances agricultural equipment to small farmers to help create more profitable operations in the Ukraine.

My relationship with impact investing has mostly been rocky, a lot of talk and little action. I’ve learned that I need to be thorough and patient in my search. Impact investments do exist, and there is no shortage of places where money is needed. Investing safely and wisely means due diligence plays a serious role at this stage. Until impact investing becomes a staple in mutual funds, us investors will have to take a more active stance, and spend more time and resources understanding, supporting and promoting the industry. As difficult as my impact investment pursuits are, I’m in it for the long haul. Are you?

Impact Investments at the Toronto fair
Renewable energy

Microfinance and International Development

Partners in II

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