Leveraging Canada’s Social Impact Funds: Implementing the Recommendations of the Social Innovation and Social Finance Strategy for Canada

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Organization: 
New Market Funds Society

The National Impact Investment Practitioners Table (NIIPT) is a pan-Canadian, mission-driven, multilingual, mutually supportive and practitioner-led community of practice. The NIIPT currently represents 7 provinces and 20 social finance funds valued at $522 million. The NIIPT also includes seven new funds under development estimated at $1.2 billion. Over the past several years NIIPT members have provided consultation and recommendations to the government of Canada (GOC) on approaches for using government capital to leverage institutional and private capital, and how best to leverage retail capital to support social finance intermediaries.

The NIIPT strongly supports the recommendations of the Social Innovation and Social Finance Strategy for Canada. In particular, we support the implementation of Recommendation 6 calling on the government of Canada to create a social finance fund (the Fund). Government of Canada investments of $500 million will catalyze the growth of the social finance sector by mobilizing private and institutional capital. We believe this is best accomplished by segmenting these interventions in two related stages, resulting in a more robust marketplace as larger capital assemblies seek products and intermediaries:

• Stage 1: leverage the growth of existing Canadian social finance funds

• Stage 2: leverage the growth of new Canadian social finance funds

Recent engagement with and analysis of the NIIPT shows that a Government of Canada capital investment of $150 million in existing social impact funds will leverage 3x the existing funds’ capital base, with a potential to build these funds beyond the $450 million in existing active capital. Additionally, a government of Canada capital investment of $350 million in funds under development and other new funds will leverage at least $1.05 billion of new private and institutional capital over the next five years.

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Table of Contents 

EXECUTIVE SUMMARY - 3

CONTEXT - 4

RECOMMENDATION - 5
    - SEGMENTED INTERVENTIONS
    - CATALYZING PRIVATE CAPITAL

LEVERAGING GOVERNMENT CAPITAL - 7
    - KEY PRINCIPLES

GOC INVESTMENT RISK - 8
    - RISK ASSESSMENT METHODOLOGY
    - INCLUSION CRITERIA
    - SAMPLE SIZE
    - IRR METHODOLOGY
    - LOAN LOSS METHODOLOGY

RESULTS - 10
    - INTERNAL RATES OF RETURN (IRRS)
    - ESTIMATED LOSS RATES

NEXT STEPS - 11 

APPENDIX I - ABOUT THE NIIP TABLE - 12
    - DEFINITION
    - NIIPT MANDATE
    - FUND MANDATES
    - COLLECTIVE EXPERIENCE
    - CURRENT SCALE
    - GEOGRAPHIC DIVERSITY

APPENDIX II – NIIPT FUND MANDATES - 14
    - EXISTING FUNDS
    - NEW FUNDS UNDER DEVELOPMENT

APPENDIX III – LOAN LOSS ANALYSIS - 17
    - OBJECTIVE
    - ASSUMPTIONS
    - RE-LEVERAGING EXISTING NIIPT FUNDS
    - ESTIMATED LOSS PROVISIONS FOR EXISTING NIIPT FUNDS
    - LEVERAGING THE NEW NIIPT FUNDS
    - ESTIMATED LOSS PROVISIONS FOR NEW NIIPT FUNDS
    - ESTIMATED LOSS PROVISIONS

APPENDIX IV – NIIPT MEMBER PROFILES - 20
    - 
CANADIAN CO-OPERATIVE INVESTMENT FUND
    - CHANTIER DE L’ÉCONOMIE SOCIALE 
    - COMMUNITY FORWARD FUND
    - COPOWER 
    - INVESTECO
    - MaRS CENTRE FOR IMPACT INVESTING 
    - NEW COMMONS DEVELOPMENT 
    - NEW MARKET FUNDS 
    - NOVA SCOTIA CO-OPERATIVE COUNCIL 
    - RENEWAL FUNDS 
    - RHIZA CAPITAL 
    - SAINT JOHN COMMUNITY LOAN FUND 
    - SEED WINNIPEG INC. 
    - SOCIAL ENTERPRISE FUND 
    - VANCITY 
    - VERGE CAPITAL 
 

Year: 
2018
Categories: 
Finance
Policy Development & Advocacy
Source: 
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