The House of Commons Standing Committee on Finance invited Canadians to participate in its annual pre-budget consultations process. The Committee intends to table a report on these consultations in the House of Commons prior to its adjournment in December 2023.
CCEDNet Manitoba is looking for proposals for programming for the Gathering on October 20, 2023!
The Gathering is a day filled with hope to anchor you to others working to challenge the status quo and build positive alternatives. We are looking for workshops, panels, and presentations for facilitating connecting opportunities between participants, and for fun & engaging ways for the community to connect.
We are pleased to announce our new project partners as part of the Regional Initiatives Program, an ecosystem building initiative funded by the Government of Canada’s Investment Readiness Program (IRP).
Following an open call for proposals, the following projects were carefully selected from 117 applications due to their innovative work in the CED / social innovation ecosystem in Canada. The volume of applications highlights how strategic ecosystem development at local and provincial/territorial levels is an ongoing need across the country. The criteria from which these initiatives were assessed considered how the project would contribute to building stronger ecosystems of support in their respective regions, and whether their planned approach operated in intersectional, intersectoral, and collaborative ways.
Project: CDEC de Trois-Rivières in collaboration with CDEC’s across Quebec aim to review and adapt their organizational models and approaches to better meet community needs in their regional ecosystems and foster long term sustainability as part of Québec’s social economy ecosystem. In the process, they will document the past and current models of Quebec’s CDECs, including lessons learned and the changing context of regional development in Quebec. This project will highlight the distinctive characteristics of Quebec’s CDECs and the expertise built up over more than thirty years.
Project: Common Good Solutions will host a collaborative, multi-stakeholder engagement summit on social innovation and social finance in Atlantic Canada. The goal is to bring together various stakeholders from the region to strengthen the Atlantic’s social impact ecosystem and build a strong impact network. This project is focused on connecting stakeholders, relationship building, knowledge sharing, and highlighting emerging initiatives from across the region to shape shared and strategic commitments in Atlantic Canada and to set a policy and advocacy agenda that will inform the direction of future ecosystem development.
Project: The Centre for Social Enterprise aims to quantify the size and stage of the social enterprise ecosystem in Newfoundland and Labrador in order to understand the potential demand for an impact investing fund in the province. The secondary objective is to educate social entrepreneurs, small business owners, and non-profit, charity, & co-operative leaders about the power and potential of social finance to help them stabilize and grow their operations.
Project: ONN’s Community Wealth Building project aims to build, strengthen and sustain Ontario’s broad social economy ecosystem across sectors. Through knowledge mobilization activities and convenings, ONN’s project will connect existing and new organizations in the social economy ecosystem, facilitate networking opportunities, and increase awareness of community economic development among key stakeholders. In addition, with the input from convening participants, ONN’s project will help identify the infrastructure and support needed in Ontario for future social economy ecosystem building in Ontario.
Project: BC Social Enterprise CED Convenings – Purppl Community Contribution Company (CCC), Scale Collaborative, and Vancity Community Foundation will convene four gatherings to help connect local social enterprise networks, enable networks to learn with and from each other, and raise awareness of social entrepreneurship as a means of CED. There are two primary activities that anchor this initiative: 1) Social Enterprise Conversations which are grassroots convenings about social enterprise leadership and the challenges and innovation required to acquire, operate and expand a social enterprise and impact strategy. 2) Connect Money Impact (CMI) bringing together social entrepreneurs, impact investors and ecosystem builders for a day of inspiration, learning, and connection.
Project: This project will conduct a province-wide Social Enterprise Needs Assessment & Ecosystem Engagement, supporting the strategic goals of the newly formed Saskatchewan’s Social Enterprise Hub to 1) expand awareness for social enterprise (SE) as an inclusive business model that transcends the public, private and non-profit sectors and 2) increase the capacity of the provincial ecosystem to support retention and growth of SE.
We look forward building strategic regional ecosystem capacity with the above listed initiatives in 2023-2024!
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Funding Source: This opportunity is supported by the federal Investment Readiness Program.
CCEDNet Manitoba recently relaunched the Financial Sustainability Series. This series defines financial sustainability for non-profits and explores resources and strategies for improving it. Ten member organizations participated in this four session series.
In this article, facilitator Brendan Reimer shares seven key factors in mobilizing resources for mission success. Read morehere.
A version of this post appeared originally on the RIPESS website
The Global Social and Solidarity Economy Forum (GSEF) is a key international gathering for all stakeholders of the Social Solidarity Economy, which aims to share practices and visions that will help build a more inclusive and egalitarian world through sustainable economic development.
The 6th edition of GSEF took place in Dakar, Senegal from May 1 to 6 2023, with the theme “Transition from informal economies to collective and sustainable economies for our territories.” It brought together elected officials and leaders from around the world, international experts, representatives of development agencies and actors involved in the SSE to propose concrete actions for tomorrow.
One of the Forum’s co-organizers was RIPESS, a global network of continental networks committed to the promotion of Social Solidarity Economy. CCEDNet is a member of RIPESS North America.
Participants in the Forum worked together to produce two critical documents: the GSEF 2023 Declaration in Dakar and the Call from the Youth. Both documents affirm the strength of the social and solidarity economy as a model to address contemporary crises and achieve the Sustainable Development Goals; each document provides a set of calls to action that can help facilitate “ecological, social and economic transformation[s].”
The Stronger Together Awards were created in 2019, marking CCEDNet’s 20th anniversary, with the intention of annually recognizing and honouring past and present CCEDNet members who have advanced Community Economic Development by working to strengthen and advance sustainable and equitable local economies or made outstanding contributions to CCEDNet.
The first two years of the Stronger Together Awards celebrated individuals who had received honorary lifetime memberships over the years or had contributed long standing leadership on the Board. Starting in 2021, however, we implemented an open call for nominations from CCEDNet members, which led to five winners being selected in 2021 and another three in 2022.
This year, we followed the same process again, with a call for nominations being issued at the beginning of April. It is a great pleasure to share our winners here. Congrats!
2023 Stronger Together Award Recipients
Quint Development Corporation
Quint has been serving Saskatoon’s core neighbourhoods for over 25 years and has been involved in CCEDNet since the beginning. Most recently, they’ve been one of the organizational members contributing to our Government Relations project, working collaboratively to increase our network presence and power with the federal government but way back in 2008, they were also the local host of the National CED Conference.
The work and impact of Quint is a real life example of an ideal community. They say “the CED approach has the potential to build healthier communities – where people regain some measure of control over their day-to-day lives and where human and local needs take precedence over distant and corporate needs”.
This approach that so deeply resonates with CCEDNet’s Theory of Change is proving impactful. In a community managing through deep disparities and inequality, they have housed over 2600 people, created 8 housing co-ops, and built or renovated over 200 community owned housing units. They’ve developed many social enterprises and community organizations, including Build Up Saskatoon, Station 20 West, and the Boxcar Cafe, employing folks facing barriers to good jobs. And they know that a resilient community is more than houses and jobs – it’s also one that is joyful and connected with community events and arts & cultural programming.
Alterna Savings
Alterna Savings and their Community Impact team are the first financial institution to receive a Stronger Together Award! Alterna was one of the first credit unions in Canada to offer micro-loans through the Community Microfinance Program. The program also offers wrap-around support for underserved entrepreneurs with one-on-one consultations, financial education, tools, and workshops. Since its inception, the program has disbursed millions in loans and helped change the lives of thousands of underrepresented people and their families.
More than a loan, Alterna differentiates our work in the community space by providing the educational support individuals and organizations need to thrive. Through Alterna’s Community Financial Education Program, Alterna develops and delivers financial education programs, resources, and supports tailored to the specific needs of underserved and underrepresented individuals, organizations, and communities.
Alterna’s recognized expertise in the field of microfinancing is what led them to be part of a team tasked with developing the Black Entrepreneurship Loan Fund with the Federal Government. Alterna was a strong advocate for a microloan pilot, to provide support for Black entrepreneurs looking for loans to be part of the program – because, in Alterna’s experience, this was a key gap for Black entrepreneurs. Working in partnership with the Federation of African Canadian Economics (FACE) and the Government of Canada, Alterna saw the launch of the Black Entrepreneurship Loan Fund Microfinance Pilot Program, which will help to break down some of the systemic barriers faced by Black entrepreneurs.
Alterna continues to build on its reputation in microfinance and on long-standing partnerships within the affordable housing and non-profit sectors. Considerable effort has been made to strengthen existing and develop new partnerships and working relationships. The Community Impact Team at Alterna today truly shows how community impact can be significantly strengthened through partnerships and working together with the community to achieve the desired impacts.
Alterna is not just your ordinary financial institution. They have been dedicated to providing innovative financial solutions while prioritizing the well-being of the communities they serve.
Green Action Centre
The Green Action Centre (GAC) is an important community-based non-profit in Manitoba. Their primary areas of work are green commuting, composting and waste reduction, sustainable living, and resource conservation. Their work spans from helping individuals and communities take climate action, all the way through to policy and systems change work.
Compost Winnipeg is a social enterprise of GAC. They saw an opportunity to provide a much-needed service, and generate revenue for the Centre, while preventing waste and greenhouse gas emissions. Compost Winnipeg was launched in 2016 with a single pickup truck for collection, and has now grown to a five truck fleet serving most areas of the city, and diverting over 70,000 kilograms of organic waste from the landfill every month!
Green Action Centre is a long-time CCEDNet member. They have a new ED, and numerous new staff members leading exciting projects. They exemplify new leadership within an established CED organization, bringing in fresh ideas and perspectives.
CCEDNet staff in Manitoba decided to nominate GAC and Compost Winnipeg because of their strong participation across CCEDNet Manitoba’s programming this year:
GAC staff have actively participated in the MB Member Meeting, Policy Summit, member meet ups, and in strategic conversations about the Network’s work in Manitoba. GAC staff frequently attend MB Learns events, have put together workshops at the Gathering in recent years, and have had a staff member on the Gathering Design Team.
Compost Winnipeg has been involved in Social Procurement advocacy work at the City of Winnipeg, and supported in further advocacy work at the City to adopt a curbside composting program. GAC’s impact in Winnipeg and Manitoba on environmental education, action and policy change is immense.
The word “queer” contains multitudes. In the face of rigid, narrow, and individualistic social structures, queerness can convey fluidity, fullness, and collectivity. As a verb, “to queer” can mean to dismantle exclusionary practices in order to foster not only safety, but joy.
This Pride, we celebrate queerness in all of its radical potential, and we ask: what might it mean to queer community economic development (CED)?
Some might say that CED has always been queer. After all, it’s an alternative economic model based upon collective care. Plus, many CED strategies have deep roots in queer and trans communities, such as mutual aid and housing co-ops.
Unfortunately, these connections to queerness do not make the CED sector inherently safe or friendly. Much of the anti-2SLGBTQ+ exclusion present in the mainstream world of work pervades the social and solidarity economy as well. And with rainbow capitalism and pinkwashing on the rise, corporations and governments that pledge support to the 2SLGBTQ+ community often end up funneling resources to corporatized nonprofits, which does little to improve the the lives of queer folks who are BIPOC, poor/ working class, disabled, and/ or grappling with other forms of systemic oppression. Indeed, a lack of institutional funding and support continues to plague many organizations that provide vital frontline services to 2SLGBTQ+ folks.
These issues are manifestations of the broader systems of oppression targeting queer folks in Canada and around the world. However, an exclusive focus on the harms caused by anti-2SLGBTQ+ persecution can perpetuate the “unhappy queers” trope and even risks pathologizing queer folks as damaged. As Dr Eve Tuck says in a letter to communities, educators, and researchers who work with Indigenous communities, a damage-based framework “reinforces and reinscribes a one-dimensional notion of [certain] people as depleted, ruined, and hopeless.”
Instead, Dr Tuck suggests that we bring desire into central focus: “Desire, yes, accounts for the loss and despair, but also the hope, the visions, the wisdom of lived lives and communities. Desire is involved with the not yet and, at times, the not anymore.”
What would it mean to explore and center queer desires – for pleasure and abundance, for solidarity and security – in all CED work? What would this reshape and reframe? And how might all of us incorporate queer liberation as fundamental to everything we do?
This piece was featured in CCEDNet’s June 2023 national newsletter. If you liked it, be sure to subscribe to our mailing list.
Social purpose organizations, such as social enterprises, non-profits, charities and co‑operatives, are at the forefront of tackling Canada’s persistent social and environmental challenges, and they are key contributors to the Canadian economy. However, social purpose organizations face barriers and systemic biases that exist in the current finance ecosystem.
Today, the Minister of Families, Children and Social Development, Karina Gould, officially launched the $755 million Social Finance Fund, which is a groundbreaking, long-term initiative to advance the growth of the social finance market in Canada. The Social Finance Fund is a foundational element to the Social Innovation and Social Finance Strategy, along with the Investment Readiness Program and the Social Innovation Advisory Council. Social innovation and social finance plays a fundamental role in tackling persistent challenges like access to affordable housing, food insecurity, and poverty.
By increasing access to flexible financing opportunities in the social finance market, the Social Finance Fund will help social purpose organizations grow, innovate, and enhance their social, economic, and environmental impacts. They will also extend the reach of social finance to underserved populations, sectors, and regions in Canada, including rural and remote communities and the North.
Through a rigorous, competitive and open process, three fund managers were selected to act as investment managers for the Social Finance Fund. They are:
Boann Social Impact is a new joint venture with the investment fund manager Encasa, and the not-for-profit trust Table of Impact Investment Practitioners, a longstanding community of practice now encompassing over 80 Canadian social finance intermediaries and partners;
Fonds de finance social – CAP Finance is a network of financial institutions and organizations that are working in Quebec and focused on the social economy and solidarity-based finance. Led by the Réseau d’investissement social du Québec and the Fiducie du Chantier de l’économie sociale, nine key investors are involved in the project. Fonds de finance social – CAP Finance will invest specifically in Quebec; and
Realize Capital Partners is a collaboration between the impact investment management and advisory firm Rally Assets, and the early-stage venture capital fund manager Relay Ventures.
The fund managers will receive $400 million over the next five years to invest, and are expected to leverage up to another $800 million in private investment to foster the market’s growth and long-term sustainability. This will provide investors with opportunities to engage in socially responsible investment and to direct their capital towards public good initiatives. Funds will be invested in existing or emerging social finance investors, which are financial entities that raise money from investors to make social finance investments, using innovative and complementary strategies to sustainably grow the social finance market and to expand flexible financing opportunities for social purpose organizations.
Fund managers will allocate a minimum of 35% of their investments into initiatives promoting greater social equity, including a minimum of 15% into initiatives promoting greater gender equality. Fonds de finance social – CAP Finance will invest specifically in Quebec, while Boann Social Impact and Realize Capital Partners will invest in the rest of Canada.
The Social Finance Fund will help Canada achieve the United Nations Sustainable Development Goals (SDGs). Canada is advancing the SDGs to build a more prosperous, healthy and sustainable future for all with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. By increasing the accessibility and flexibility of financing opportunities in the social finance market, the Social Finance Fund will help social purpose organizations grow, launch new programs, and serve the critical needs of diverse communities in Canada.
Quotes
“The Social Finance Fund is an innovative and first of its kind program. Through this program, the Government of Canada is investing in, and supporting the growth of, a vibrant social finance market. By investing in the Social Finance Fund, we are enabling social innovators to succeed, as they lead the way in building a more prosperous and inclusive economy that works for all Canadians. I look forward to seeing the positive impact the Social Finance Fund will have for Canadians and local communities. We are looking forward to working with the fund managers, our partners, and stakeholders on this historic milestone, which is a foundational element of the Social Innovation and Social Finance Strategy.”
– Karina Gould, Minister of Families, Children, and Social Development
“Through the Social Finance Fund, the Government of Canada is supporting social entrepreneurs and innovators who are tackling the toughest challenges we face as a society. It is about making their big homegrown ideas a reality, and working together to build a Canadian economy that works for everyone. As they access capital through this fund, I look forward to seeing them succeed in scaling the many positive impacts that they create for the benefit of communities across Canada!”
– Ryan Turnbull, Member of Parliament for Whitby
“Boann welcomes the roll-out of this much-anticipated initiative and to working with intermediaries, investors, and communities committed to expanding the reach of impact investment in Canada. Harnessing public, private and philanthropic capital, the ground-breaking Social Finance Fund will amplify efforts to foster more equitable and sustainable economic growth. In plain language, it’s about an economy that’s more green and less mean. It’s about investing in better results for all communities, about enhancing positive environmental and social outcomes. It is about thinking more long-term, more holistically, more ambitiously about achieving triple bottom line impact with capital.”
– Derek Ballentyne, CEO, Boann Social Impact
“Social finance is embedded in Quebec’s DNA. Based on principles of social equity, social finance has been and continues to be a response to the needs of the population. The Social Finance Fund will be an additional lever for social finance intermediaries that want to support collective projects led by social economy entrepreneurs and social purpose organizations whose activities have social, cultural and environmental impacts in addition to their economic impacts. Our organization is proud of the confidence that the Government has shown in us and proud to be contributing to strengthening and transforming the social finance market in Canada, specifically in Quebec.”
– Nathalie Villemure, President, Fonds de finance social – CAP Finance
“This is such a game changer for the social finance market. The government investment has enabled us to create a new fund that will set itself apart by prioritizing positive impact and generating market-rate financial returns, at scale. We are one big step closer to realizing the goal of financial markets creating outcomes that are highly beneficial to both investors and investees.”
– Kelly Gauthier, President, Rally Assets on behalf of Realize Capital Partners
Quick facts
The Social Finance Fund is a long-term program and will run until March 31, 2039. The majority of the funds are expected to be repaid at the end of the program. The following investment managers were selected:
Boann will receive $154,129,374 in funding for the period of 2022-23 to 2025-26.
CAP Finance will receive $89,808,426 in funding for the period of 2022-23 to 2025-26.
Realize Capital Partners will receive $153,435,625 in funding for the period of 2022-23 to 2025-26.
Designed through a social equity lens, the Social Finance Fund aims to reduce barriers faced by equity-deserving groups in accessing flexible financing opportunities. Fund managers have committed to the – 30 Challenge and will work toward gender parity (50% women and gender diverse people) and more representation of equity-deserving groups (30%) in their governance and senior leadership.
The Investment Readiness Program was a $50 million program over 2 years starting in fiscal year 2021 to 2022, designed to help advance social innovation and social finance in Canada.
The Social Innovation Advisory Council (SIAC) is an advisory group consisting of leaders and experts from across the social purpose, social innovation and social finance sectors that provides strategic advice and subject matter expertise to the Government of Canada to help advance the Social Innovation and Social Finance Strategy.
From August 12, 2021, to September 29, 2021, the Government of Canada held a competitive call for expressions of interest to act as fund managers for the Social Finance Fund. A comprehensive assessment resulted in the three investment fund managers being selected by the Minister of Families, Children and Social Development.
The Social Finance Fund is a $755M program to be deployed over the next 10 years. Fund managers are eligible to receive both conditionally repayable contributions and non-repayable contributions.
Conditionally repayable contributions: Used for investment activities, to invest in social finance intermediaries and in rare cases, directly into social purpose organizations.
Non-repayable contributions: Up to 10% of total funding request to cover expenses such as administrative costs, blended-finance and ecosystem-building activities.
In recognition of economic reconciliation as an important step toward Indigenous reconciliation, $50 million of the $755 million Social Finance Fund was allocated to the Indigenous Growth Fund, which is an Indigenous-led and self-determined fund managed and distributed by the National Aboriginal Capital Corporation Association. The remaining $705 million of the Social Finance Fund will be deployed by the fund managers into the social finance ecosystem.
The Social Finance Fund has access to $400 million from the available $705 million, over a period of 5 fiscal years (2023 to 2027). ESDC must return to the Treasury Board of Canada for approval to access the remaining funding allocated to the program ($305M).
The Business Development Bank of Canada (BDC), a financial Crown corporation wholly-owned by the Government of Canada, is Canada’s only bank exclusively focused on providing support to Small and Medium-sized Enterprises (SME’s) and entrepreneurs. As part of its mandate, the BDC is required to operate as a complementary lender in the market, offering loans, investments, and services that supplement or complete services available from private sector service providers.
The BDC Act requires that a review of the legislation be conducted on a regular basis. As part of the 2022-23 legislative review process, the BDC encouraged stakeholders to read a consultation paper and to complete a consultation survey.
The BDC has such a tremendous potential role to play in fostering community economic development across Canada. That’s why CCEDNet responded to the survey, encouraging the Bank to ensure that “social inclusion, economic equity, and justice for all leads its lending, investing, advisory services, and business practices.”
CCEDNet’s response to the BDC survey is part of our public policy and government relations work. To learn more about these efforts, visit our People-Centered Economy Group page.
We are happy to share that earlier this year, CCEDNet registered for the 50 – 30 Challenge!
The 50 – 30 Challenge is an initiative between the Government of Canada, Canadian businesses and diversity organizations.
The goal of the program is to challenge Canadian organizations to increase the representation and inclusion of diverse groups within their workplaces, while highlighting the benefits of giving all Canadians a seat at the table.
The 50 – 30 Challenge asks that organizations aspire to two goals:
Gender parity (50% women and/or non-binary people) on Canadian boards and/or in senior management; and
Significant representation (30%) on Canadian boards and/or senior management of members of other equity-deserving groups, including those who identify as Racialized, Black, and/or People of colour (“Visible Minorities”), People with disabilities (including invisible and episodic disabilities), 2SLGBTQ+ and/or gender and sexually diverse individuals, and Aboriginal and/or Indigenous Peoples. The program and participants recognize Indigenous Peoples, including First Nations, Métis and Inuit, as founding Peoples of Canada and underrepresented in positions of economic influence and leadership.
Many CCEDNet members have already registered for the challenge. Whether or not you’re a member, we encourage to register your organization, as well.
Check out the 50-30 Challenge website for more information including how to register and helpful links on implementing more diversity and inclusion at your organization!
Note: this piece originally appeared on the Ontario Nonprofit Network’s website. You can read the original piece here.
Community wealth building (CWB) means doing local economic development in a way that keeps resources local and distributes those resources equitably.
Myth #1: The first legal duty of the board is to minimize risk and community wealth building is too risky.
We all know it’s impossible to eliminate risk completely, but that doesn’t stop many boards from trying! While boards are required to be prudent and avoid unnecessary risk, it is important to recognize that the overriding duty of directors is to do what is necessary (including taking some risks) to pursue the nonprofit’s mission effectively. Once a board has determined an activity is necessary to furthering its mission, the question then becomes how to do it in a prudent way, not whether to do it.
Like any economic activity, CWB can come with a number of reasonable, unavoidable risks. From borrowing money, to purchasing from or investing in new partners, risks are a healthy part of nonprofits engaging in revenue generating activities and building community wealth. So when the board is faced with an opportunity to engage in CWB, it’s actually almost impossible to ask the question in the abstract “is this proposal too risky?” Strictly speaking, from a legal perspective, it makes more sense to first ask “Does this proposal advance our mission?” and only then ask, “if so, are the risks involved reasonable relative to the potential impact of this proposal?”
If part of our sector’s mission is to challenge systemic racism, colonialism, and other centuries old roots of contemporary problems, we need to be more open about what level of risk is reasonable in the pursuit of equity.
Myth #2: Our legal purposes don’t include community wealth building so we can’t do it.
A board member could be forgiven for thinking “we’re a food bank not an economic development agency, this is simply not in our scope.” But as we’ve heard time and time again, the issues of food insecurity, economic disenfranchisement, gender-based violence, and other crises are intertwined. As articulated by Feed Ontario, the goal isn’t to operate a food bank but to end hunger.
This may come as a surprise but corporate and charity law actually have tools to help address the holistic and complex nature of our missions as nonprofits. Modern corporate and charitable purposes (also known as “objects”) are usually drafted in a broad way to allow for the widest flexibility to further the overriding mission of the organization. In fact, when it comes to charities, there is a centuries-old rule that requires courts to read purposes broadly to allow the underlying charitable intent to succeed.
There are many other examples of how modern nonprofit and charity law have developed to give boards wide legal power to do what is necessary to pursue their overriding mission. For example, previously, nonprofit corporations only had the legal powers given to them specifically in statute or their governing documents (showing a narrow conception of what was needed to pursue the nonprofit’s mission). Ontario’s Not-for-Profit Corporations Act gives Ontario nonprofits all the powers of a natural person, like you or me. This is a clear signal that modern nonprofits should be able to do whatever in the board’s judgment is best in the pursuit of the overriding mission (as long as it’s legal!).
In charity law, a doctrine has developed called the doctrine of “ancillary and incidental”, which allows charities to engage in activities, such as advocacy activities and business activities, as long as they support the overriding charitable mission.
And whether you are a poverty relief organization, an arts or culture collective, a settlement agency, or many other kinds of nonprofits, community wealth building is absolutely relevant to furthering your purpose.
Myth #3: Nonprofits are legally prohibited from earning a surplus so they can’t do community wealth building.
This myth is false for two reasons. Firstly, there are many ways to support community wealth building without needing to earn a surplus (e.g. purchasing your catering or office supplies from a local social enterprise). Secondly, nonprofits are allowed to earn a surplus in a variety of ways.
Nonprofits are not allowed to earn a surplus and then distribute that surplus to directors or members as if they were shareholders. However, nonprofits can earn a surplus if it is calculated to go into a reasonable reserve, and charities can earn a surplus if the surplus results from:
charging for charitable activities, such as tickets to see a performance or tuition for a school
allowable investments, such as stocks, bonds, or mutual funds
related businesses, such as a hospital parking lot or a workshop at a youth shelter.
When I say “reasonable reserve” you may think “3-6 months operating expenses.” But actually, a reasonable reserve can be quite a bit higher as it can include a capital reserve, operating expenses, and liabilities (e.g. changes to law or litigation). As long as you have a policy to clearly document the rationale for the amount of your reserve and your reasons are sound, you are, generally speaking, on solid footing. Once you have this reserve in place, nonprofits are entitled to make reasonable investment decisions which can be made in a way that supports community wealth.
Charities have a whole host of options and flexibility when it comes to revenue earning, as well as how they purchase and invest.
Nonprofits can work against the continued extraction of wealth from Indigenous, racialized, and other economically disenfranchised communities. Whether it’s a clinic choosing to buy or hire locally, a housing supplier procuring from co-ops, or a foundation seeding the funding for a community investment organization, there is no end to the way nonprofits can build wealth in a widely-held and democratic way.
Nonprofits and charities are allowed to engage in CWB even if it means earning a surplus or taking on reasonable risks, as long as it is in the service of their overarching purpose. They just need to question some widely held assumptions.
Disclaimer: The above is intended as general legal information not legal advice specific to your situation. What the law is in any given situation will vary but we hope we have shifted your question from a “yes/no” to a “how”.
Benjamin Miller
Benjamin (he/him) is a Policy Advisor/Lawyer at the Ontario Nonprofit Network (ONN). He comes to ONN from the Government of Canada and Community Legal Education Ontario (CLEO) where he focused on nonprofit and charity law and policy. Over the past 4 years at CLEO, Benjamin has answered hundreds of nonprofit law questions and developed an online interactive bylaw builder for the ONCA. In 2018, Benjamin served as a Summer Research Fellow at ONN researching the topic of transfer payment agreement modernization. His first book on long-term strategic communications “The 100-Year PR Plan: A Guide for advocates” was published in January 2021 by Civil Sector Press. His other writings on topics ranging from dark money to campus clubs have appeared in publications such as The Philanthropist, Policy Options, University Affairs, Canadian Lawyer, Slaw, and the Globe & Mail. Benjamin holds a JD and MPP from the University of Toronto and an MA in political theory from the University of Ottawa.