Social finance 101

transcript

Agenda

-Introduction

-Crowdfunding

-Community Bonds

-Microloans

-Social Impact Bonds

-Social Enterprise

-CEDIFs

Timothy Nash @timenash nash@sustainableeconomist.com June 10, 2013

Social Enterprise

-Any organization that earns revenue by selling a product or service and generates a positive social impact

Crowdfunding

-Raise money for specific projects

-Perks / rewards are given for donations - bigger donations get bigger rewards

-Tiny donations are made by large crowds

-These are donations, not investments

Crowdfunding

http://www.indiegogo.com/projects/handmade-products-hand-built-business-kid-icarus-needs-help-to-take-flight

Microloans

-Small loans to entrepreneurs who don’t have access to traditional loans

-Require a strong business plan, and often come with additional coaching, mentorship

-Creates meaningful employment by supporting the next generation of entrepreneurs

Social Enterprise Support

Community Economic Development Investment Funds (CEDIFs)

Raise capital by issuing shares

Used for startup or expansion

Build community support

35% tax credit

Locked-in for 5 years

Strengthen local economy

-Allows organizations to raise money by using shares to non-accredited investors

-Investors get a 35% tax credit and strengthen the local economy with their RRSP

-These investments can be very risky, and investors won’t be able to sell if it turns south

Community Bonds

$10,000 per bond

4% return for 5 years

Raised $2 million

Provides space for social enterprises

Protection against global ‘systemic’ risks

Community Bonds

-Allows non-profits to raise money for expansion

-Investors get a ‘blended return’ - a financial return plus a social return on investment

-Backing it with an asset (real estate) reduces risk, and lowers the expected return

http://communitybonds.ca/

Social Impact Bonds

SIBs are a way to leverage private money to invest in preventative programs that will lower

government expenditures in the long-term

Social Impact Bonds

Investors

Intermediary

Non Profit Government

1. Make Investment

2. Fund Prevention Program

3. Outcomes that Reduce Expenditures

4. Pay for Programs that Meet Targets

5. Repay Investment + Return

Social Impact Bonds

http://www.rockefellerfoundation.org/uploads/files/655fab01-83b9-49eb-b856-a1f61bc9e6ca-small.pdf

Social Impact Bonds

-Agree on social outcome metrics

-Define the scope

-Quantify saving to government

-Independent verification of results

THANK YOU

SustainableEconomist.com

Social finance 101

Economy & Finance