Long before COVID-19, Canadians struggled to access affordable housing. Now, isolation, unemployment, and mental illness — side effects of the devastating virus — are causing our most vulnerable citizens to become even more vulnerable.
While many Canadians have taken the safety of their homes during the pandemic for granted, the Canadian Mortgage and Housing Corporation (CMHC) has found that 1.6 million Canadians still don’t have safe or affordable housing.
The culprit is often systemic discrimination making it extra-hard for some people, including Black, Indigenous, and LGBTQ2S Canadians, to access and maintain safe, affordable, and stable housing.
There’s an urgent need for innovative and immediate solutions to this housing crisis.
The government of Canada’s National Housing Strategy — a 10-year, $70-billion plan to give more Canadians a “place to call home” — got a $2.5-billion boost in the federal budget. But this still doesn’t meet the demand for affordable housing in Canada, meaning that provinces, territories, and municipalities are contributing unequally to fill the gap. Additional sources of capital are required, and social finance is an important one.
Social finance is well-established in Canada. It’s an approach to investing that provides measurable social and environmental benefits by mobilizing private and philanthropic capital for the public good through social-finance intermediaries. Like traditional investments, social finance pays a return on investment while supporting the community and stimulating the local economy.
Investors have been helping non-profits and social enterprise for years. New Market Funds, for example, has been delivering investment opportunities with financial returns and lasting community benefit since 2013. The company works coast to coast, managing $65 million in capital from financial and other institutions, foundations, family offices, and individuals. New Market Funds deploys money to create affordable housing, reduce greenhouse-gas emissions, and increase marginalized populations’ access to capital, among other recipients.
Much of its activity currently involves affordable housing, with two funds that help finance non-profit and co-operative housing. The latest of these — started just this year using $50 million from Canadian accredited investors — will enable non-profits to buy affordable-housing assets that would otherwise be lost to profit-driven entities.
New Market Funds helps community partners in the 30 largest metropolitan markets in Canada by: filling equity gaps to help buy a property or complete a project; providing additional equity to expand a project; or investing to allow community partners to take equity out of a stabilized project to fund future projects.
In 2019, Ottawa promised a Social Innovation and Social Finance Strategy, and a 10-year, $755-million Social Finance Fund, neither of which was delivered. In the latest budget, the government recommitted to disbursing the Social Finance Fund, with an initial $220 million in financing over the next two years. Ottawa estimates the fund could attract up to $1.5 billion in private-sector capital to: support development of the social-finance market, create thousands of new jobs, and drive positive social change.
Until it keeps its Social Finance Fund commitment, Canada remains the sole member of the G7 that hasn’t directly invested capital to accelerate the growth of this critical market of social investment.
Now is the time for the federal government to demonstrate support for social innovation and social finance with a national strategy and Social Finance Fund.
With smart investments, our communities are poised to solve some of our biggest problems, and to create a more inclusive, prosperous, and sustainable future post-COVID.
Andy Broderick is a managing partner at New Market Funds, and helps to lead its non-profit work to develop multi-family housing.
*The opinions expressed in blog posts are those of the author(s) and do not necessarily reflect the position of CCEDNet