Social Innovation Generation (SiG) Session at MaRS – 1 of 2

Yesterday at MaRS in downtown Toronto I attended a gathering of extraordinary people with minds directed toward changing the world through social innovation.

The lecture was entitled: “Impact Investing: Building Prosperity outside the Mainstream.”

An incredible opportunity, and I was inspired and transported to a higher calling for my life’s role by the quality and depth manifested by those extraordinary presenters and participants.

This post includes two elements: my analysis and understanding of the presentations, the question period, and my questions that arose thereafter relating to this essential transformative global issue.

First, SiG and MaRS–who they are and what they are about, and then I look at the event itself: its speakers, questions which arose, and the concrete actions I am taking which relate to issues addressed at the conference.

“Social Innovation Generation (SiG) is a group who believes that serious social problems can be solved. SiG is a collaborative initiative that seeks to address Canada’s social and ecological challenges by creating a culture of continuous social innovation. Our focus will be on fostering social innovation to achieve impact, durability and scale.” Taken from the http://sigeneration.ca/

“MaRS connects the communities of science, business and capital and fosters collaboration among them.

MaRS drives social and economic prosperity by leading Canada’s innovation mission.

We at MaRS envision Canadian communities that are prospering through enhanced employment prospects, the creation and retention of local wealth and an enriched cultural and social environment. To realize this vision, we foster and promote Canadian innovation.

MaRS helps create successful global businesses from Canada’s science and technology.

MaRS provides resources — people, programs, physical facilities, funding and networks — to ensure that critical innovation happens. We stimulate, identify and harness great ideas, nurture their development and guide the transformation of those ideas into reality. We measure our success through the companies that emerge after receiving help from MaRS.” Taken from http://www.marsdd.com

MaRS, beyond the physical beauty of its environment, embodies a spirit which includes magnificent people contributing so meaningfully to Canada and the world. It is an incredible facility and for those of you who can, visiting MaRS will be an exciting life experience for you.

“Impact Investing: Building Prosperity Outside the Mainstream.”

The lecture was moderated by John Tory, the former Ontario Provincial Leader of the Progressive Conservative Party, Director at Rogers Communications, and two-time Toronto Mayoral Candidate.

The Right Honorable Paul Martin, twenty-first Prime Minister of Canada (2003-2006), Minister of Finance (1993-2002), and Member of Parliament for LaSalle-Émard (1988-2008) spoke with eloquence at the conference.

Bill Young, the Founder and President of Social Capital Partners also addressed the conference.  Bill is a visionary, consistently demonstrating his capabilities in the corporate, and now, not for profit social finance world, especially with respect to creating employment programs and jobs. http://www.socialcapitalpartners.ca

Mr. Tory was an extraordinary moderator framing the discussion by providing a clear and concise vision for what was to be discussed. Specifically, three challenges which interrelate to social entrepreneurship and social innovation in Canada. Namely:

• Legal challenges
• Financial challenges
• People challenges

Mr. Young and Mr. Martin, respectively, were given the floor to introduce themselves.

Mr. Young led, speaking briefly about Social Capital Partners and its role in Canada. His vision is quite simple, robust and enormously powerful––Every Fortune 500 company within the next ten years will utilize a social hiring role in order to engage and assist the community within the context of fulfilling their respective business missions.

He also mentioned projects which have successful demonstrated that business and social infrastructure can work together to enrich lives and economic profitability: A Vancouver Property Management organization; A Winnipeg Renovations company; A Toronto Bike Courier, and ten (10) Thrift Shops in Montréal.

Each of these organizations works with a respective Community Service Agency to train and place employees in positions that allow them to contribute to their own lives as well as society in general. Many of these newly employed people move directly from social assistance to the employing organization.

Mr. Young, in the first five-year innovation and investment phase, produced results in collaboration with others that proved in doing business this way; organizations can generate a return on investment while transforming lives for the better in Canada.

It became apparent to Bill during this initial period that there had been no fundamental change in the landscape. While enabling hundreds of people to move from social assistance to employment and seeing positive societal and attitudes trends, he did not see the paradigm shift occur which is needed to create a transferrable model which can then be successfully undertaken anywhere and everywhere. Bill viewed the challenges as:

• How do we engage corporations?
• Can we make this cookie cutter?
• How can it be done easier, faster and better?
• Is it possible to franchise the core concept?

These questions led Bill Young to explore approaching franchised businesses with a simple proposition:

• He would provide funding through a subordinate debt financing package which was more attractive then the banks
• This enabled a franchise to raise money at what would be considered ‘friends and family rates’
• In return, the franchises would agree to hire from a Community Service Agency.

Bill first approached Active, Green and Ross. The pilot began with five (5) Hamilton locations in Ontario. This pilot was so successful that Active, Green and Ross now uses this same hiring strategy at twenty-two (22) locations.

Thus, Mr. Young created and proved a new model that is more effective, faster, easier and better. It then became a matter for him of connecting the dots.

Bill next approached the Canadian Tire Board of Directors. He learned that one evaluation applied to the Board and its executives related to an organizational ability to effectively engage the community and aid in its development.

Bill Young, with this knowledge, went to Brampton, walked through their Brampton distribution centers and found that Canadian Tire could benefit to the tune of 4,000 employees who would come into the environment as employees trained by the Community Service Agencies. In a sense, he had identified an important element in the demand/supply chain as related to Human Resources development and had done it from the entry point. Bill had demonstrated and proven the value proposition.

He pointed out that technology would also play an important role and sites such as Monster and Workopolis could contribute toward accelerating changing the way that businesses engage in Human Resources strategies and social hiring.

This will allows the Community Service Agencies to focus on training rather than placement. The current Government models see the Community Service Agencies getting a fee for placement. However, Community Service Agencies may not necessarily excel at placement whereas they have demonstrated that they do excel at training.

By taking the original model and turning it on its head Bill Young has proven that Governments will save time, money and other resources, that there will be new effectiveness developed in the system, and further realized that there may be a way to reverse engineer social systems to gain greater effect.

One might reasonably wonder how does one follow such an amazing presentation by a leading social innovator.

Quite simply––be The Right Honorable Paul Martin, former Prime Minister of Canada and best damn Finance Minister the modern world has ever known.

Mr. Martin started by pointing out that there is a massive inequity in the way that Business Entrepreneurs and Social Entrepreneurs are treated in legal, tax and regulatory ways, and with respect to access to capital. He stated that this inequity leads to business entrepreneurs having access to all kinds of capital and incentives, while Social Entrepreneurs are left out in the desert.

Mr. Martin went on to define a social and business entrepreneur as being the exact same thing in that they each want to achieve the building of something, and that each fills an essential need within the context of the social fabric of Canada.

The former Prime Minister then asked a question and framed the answer: What should Government do? And in brief, he suggested the Government should treat both the same. Further, in so doing, there will be greater capital available to achieve greater results for Canada.

Mr. Martin elaborated by stating that currently there is a deficit in that social entrepreneurs have not been given a seat at the capital table–– for a myriad of reasons social entrepreneurs have not been allowed to tap into capital markets and that this represents a major challenge that needs to be overcome.

He went on to ask, “Where then do social innovators currently get money?”

Mr. Martin clearly revealed that Social Entrepreneurs are currently limited to accessing capital that may be made available by Angel investors who can see the value in undertaking social innovations through entrepreneurship. Further, that while being a good start, access to Angel investor capital is not enough to satisfy the needs of Canada and Canadian society.

It is important to note that this former Prime Minister of Canada does more than speak of the inequity; Mr. Martin has taken action to address this issue. While in Government, Mr. Martin directed $175 million dollars toward social innovation and entrepreneurship while cautioning that this was but a drop in the bucket, and yet he could not do more at that time because he did not understand the complexities as he does today.

How then does Mr. Martin now understand more? Simply, by putting his money where the rubber hits the road. Mr. Martin has long been a vocal and active advocate for the Aboriginal Peoples in Canada. He witnessed from his time as Finance Minister and Prime Minister of Canada that there was an ever-growing divide between Aboriginals and the rest of the country.

Hence the Cape Fund was born, and the critically important CAPE Fund Mission is “to further a culture of economic independence, ownership, entrepreneurship, and enterprise management among Aboriginal Peoples, on or off reserve through the creation and growth of successful businesses.”

More specifically, in communities where economic opportunity and capable political leadership are present, the CAPE Fund within a spirit and in the context of partnership provides equity and quasi-equity capital, business expertise, and mentoring on individual projects that are capable of providing both a:

Financial Return: A reasonable return based on market conditions and transaction specifics and after taking into the costs associated with the Social Return.

Social Return: consisting of the promotion of entrepreneurship, transfer of skills, and in most instances, ultimately the transfer of ownership/control to Aboriginal entrepreneurs or community.” http://www.capefund.ca

Yet, Mr. Martin acknowledged that more is required––Federal, Provincial and Territorial Governments need to recognize that this is an area of business that is going to have massive growth potential which will put people to work, and rather than bleed the tax rolls, will increase revenues while reducing unnecessary social infrastructure expenses.

As such, Mr. Martin believes it is necessary for regulatory and tax incentives to be placed into the Tax Act and sooner rather than later.

It is clear that Mr. Martin was looking for the imprimatur or legitimacy that already exists for business to be extended to social entrepreneurship.

The former Prime Minister of Canada effectively argues that there was a dearth of competent and experienced professionals inside this world of Social Entrepreneurship, and this is one factor that makes it such a difficult sale to investors and Governments alike.

However, he pointed out that through the Cape Fund, they have invested in a building company, which hired directly off the Reserves which dot the Canadian landscape. To overcome this challenge, he felt, the best thing to do was to put outside experienced and competent managers in place and allow Aboriginals to be promoted from within as time allows. Mr. Martin believes that over the course of the next decade he will be able to hand the reins over to competent Aboriginal managers and––His vision is bang on.

Mr. Martin went on to allude to the fact that the paradigm shift has already occurred. That the Global Financial Crisis has exacerbated this shift, and that Governments in Canada have been slow to recognize that this paradigm shift has occurred. He elaborated that the effects of this recession would be long ranging, perhaps as long as ten years, and we need a definite plan to deal with the realities, with Social Entrepreneurship, leadership and training being three areas that ought to be considered as promising contributors to the future well-being of Canada and Canadian society.

The former Prime Minister emphatically pointed out that Government is the problem. By virtue of the Leviathan, Government is slow to react to situational realities. It needs to be demonstrated in such a way as to make it easy for Government to embrace the necessary changes.

And, to do this it is important to clearly understand and be realistic about returns on investment and yet point out that some of the returns may not immediately measurable.

Thus, there are longer-term considerations that need to be examined, and metrics developed to figure out returns on investment.

Mr. Martin, in conclusion, eloquently made clear that a crack exists in the fabric of society and this crack will only worsen if it is not addressed now. Further this is far greater than just the distribution of wealth inequalities––Unaddressed this rift will cause far more problems and damage to society. He points out the need is currently greater than it has ever been in the past, and that the funds available to deal with that need are ever smaller due to the recent economic meltdown. As such, we need fresh vision, new ideas and champions to attempt to reverse this damaging trend.

The next post will look at the question period related to the regulatory, financial and people problems that exist within this field.

“Social entrepreneurs are helping to create a more peaceful, just and sustainable world.” Robert Alan

“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.” Bill Drayton

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