Reflections on How We Build a More Equitable and Transparent Financial Future in Canada

COVID-19 has brought to light societies growing inequalities, systemic racism, and disproportionate impact on marginalized communities. It’s critical for Foundations, philanthropists, and impact investors to action new and inclusive ways to build a world where social and economic prosperity is enjoyed by all, removing bias and discrimination from capital flows in philanthropy to impact investing. We have the opportunity and the obligation to do better.

While 2020 marked the first time many could openly discuss racism and discrimination in the social sector, our current work in building a more equitable financial future for all Canadians continues to face many challenges. On May 5th, Philanthropic Foundations Canada held a webinar titled “Investing for Recovery and Resilience: The Innovative Model of New Power Labs.” New Power Labs is the first national platform for investors, educators, financial institutions, asset managers, social justice organizations, philanthropists, and governments to work together to build an equitable and inclusive financial sector. New Power Labs is building a movement to accelerate access to, and allocation of, capital for those communities and groups often excluded. The session was presented and moderated by Narinder Dhami (one of the authors) and included panel members Adam Spence, Founder and CEO of SVX, Victor Beausoleil, Executive Director of SETSI, and Jory Cohen, Director of Finance and Impact Investing at Inspirit Foundation. Each panelist shared the important work they are leading.

Several challenges to this work were discussed.

We often think of doing good as binary – we are good or we are bad. We see this fixed mindset in the social sector – where we don’t question policies, practices, and outcomes as we are good people, with good intentions, doing good work. With this binary approach, are we able to get better and do better? Are we setting ourselves up to drive the greatest potential impact? Are we ensuring that our programs create no harm? Are we able to recognize blind spots and address bias? Are we stuck in an approach focused on checking boxes? Our attachment to being good people in the social sector risks our ability to build back better.

Our finance system is predicated on capitalism and colonialism

Nearly 90% of investment deals in Canada are directed to companies founded exclusively by men. Black organizations receive as little as 7 cents for every $100 donated to Canada’s big charities. It’s clear that many are still excluded from access to capital. Even the “converted” have work to do. Canadian foundations deploying impact investment capital almost exclusively invest in impact fund managers who are white or male. “Despite all of the talk of diversity, equity, and inclusion, and the headway that has been made at Foundations, when you look at who is getting the money we still have a major injustice.” Edgar Villanueva, Decolonizing Wealth. Today, we celebrate white-led organizations that support communities of colour and label funding leaders of colour to drive that change in their communities “too risky.”

Fragmented data and limited research limits our understanding

We continue to point to US data to make the Canadian case on inequitable capital flows across Canada. The fragmented data points across our country paint a picture of inequality, systemic discrimination, and racism in capital access from philanthropy to impact investing. Incomplete context makes change harder and all of us less informed and equipped to address inequality. It is critical that we identify and address gaps in research, collect disaggregated data and begin to systematically measure change.

Scarcity mindset

Scarcity thinking impedes our ability to build a more equitable world. It makes us believe that we do not have enough money to invest in diverse leaders, as there would be less for known leaders and white-led organizations. It allows us to amplify that one investment we made in a diverse founder or fund while ignoring our broader portfolio. It leaves those with the least power, without access to funds. And it allows us to believe we do not have the power to drive change. A scarcity mindset enables structural and systemic racism.

“Folks are very interested in the finance part of social finance, but not with the social aspects, because social means everyone, if you’re part of an ecosystem that remained stratified and exclusionary for decades, and you’re a leader in this space, and you’re not pressing the work forward, it’s an indictment that you have become complicit in the ecosystem.” Victor Beausoleil, Executive Director, SETSI

We have the opportunity and the willingness to do better.

Changing how and to whom we deploy capital

With over a million accredited investors, 3000 family offices, and 6000 foundations in Canada, all applying intentionality, updating practices, and removing barriers, they can unlock capital to those often excluded. We can flip orthodoxies, challenge the status quo, and invest in undervalued founders, managers, and leaders. There is a whole other underbelly of policy and cultural infrastructure that needs to be changed and transformed concurrently.

Raising awareness as we all can contribute to shifting systems

Conversations on exclusionary practices that lead to inequitable flows of capital are growing, however are often limited to small groups of the “converted” and remain outside mainstream discussions. Through amplifying the baseline and highlighting effective models of change, we can begin to center equity in our work (and lives) to drive systems change at scale.

Knowing our baseline, setting targets, and building accountability systems

In our discussion, the group was unanimous in grading the social finance sector with failing marks when it comes to diversity, equity, and inclusion. Harsh, but honest. More work is needed to understand our baseline, set targets for change, and build accountability systems. This will be a journey, monitoring & measuring the change as we progress.

Building an ecosystem and movement

“Movements seek sweeping change. Organizations are often satisfied with incremental improvement. Sustaining a movement is about sustaining action.” Gottlieb Hildy, SSIR. During the panel presentation, we showcased emerging initiatives and programs that are aligned with the New Power Labs movement. While many of us are exploring how to achieve greater equity through our work, most are engaging in an often opaque and fragmented journey. By enabling the formation of a movement that facilitates individual journeys, we can move our collective work from incremental to transformational. New Power Labs supports individuals and institutions on this journey.

Deep engagement – an inclusive path forward

New Power Labs is a co-created platform focused on transformation. It is building a movement to accelerate access to, and allocation of capital for those communities and groups often excluded. Where new methods of finance, economics, wealth appreciation, and capitalism have permanently uprooted outmoded and biased hierarchical models. Our growing group of founding partners includes Marigold Capital, DUCA Impact Lab, Ontario Trillium Foundation, and Community Foundations of Canada.

Building a more equitable financial future is collective work. New Power Labs is aggregating, synthesizing, and complementing existing work across our country to help achieve this bold and urgent goal. To address inequality and shift the current baseline, we need to become comfortable with being uncomfortable. We need all of us. We need accountability. We need love, sharing, and co-operation as our driving principles.

We invite you to embark on this collective journey to build a more equitable Canada. Join us as a member of New Power Labs to challenge and inspire your work in driving systemic change across Canada.