September 25, 2020
Guest Blog

In Response to the Webinar “Are Charities Ready for Social Finance?” 


Nathan Cohen-Fournier – Head, Social Finance, Lucie and André Chagnon Foundation

Social finance has been a much-discussed topic in recent years, with the global emergence of impact investing. Investors, be they philanthropic or not, tend to seek to stimulate capital supply in social finance. This approach leads to the proliferation of impact funds and intermediaries to distribute this hybrid capital.

The Imagine Canada study—presented by Adam Jog as part of the webinar held by PFC—is significant because, rather than focusing on the supply of social finance instruments, it is concerned with demand for them. The key question it asks is this: Are charities ready for social finance?

Before getting to the core of the subject, Mr. Jog explores some central topics. What is social finance and how is it different from other approaches like impact investing, responsible investing, or solidarity-based financing? Of course, there are overlaps between these topics. The upshot is that social finance is a hybrid animal in search of itself.

Mr. Jog then covers the methodology of the survey, which included 1,018 respondents in charitable organizations across Canada. It is a shame that the study did not encompass cooperatives, which would have given a better idea of demand from stakeholders in the social economy more generally. Nevertheless, the survey covers a broad terrain representative of Canadian charities.

The results of the study are quite telling: Canadian charities are either barely ready or not at all ready—or even willing—to use social finance. Most charities (66%) are not at all or hardly aware of social finance, and 56% of them have little desire to take on debt, even if that debt would be incurred hypothetically via social financing tools that are more patient and have lower interest rates. They are mostly the larger charities, those that do not depend solely on donations, and/or those that act nationwide that are willing to use social financing tools.

For a practitioner in the social finance sector, these statistics are eye-opening. They underscore the fact that focusing on the supply of capital and on developing intermediaries is not enough. It is all the more important to support charities’ capacity for action and transformation: their organizational agility as well as their capacity to absorb a new form of non-subsidized capital. How? By creating an enabling environment, in Mr. Jog’s words, and “building the resilience of charities, not just capacity.” Mr. Jog does not dwell any further on possible solutions. That does not take anything away from the thoroughness and the instructive nature of his study: social finance, far from being a panacea, needs to adapt more to the needs of communities before meeting those of investors.

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