Radio Interview Transcript with CJBK’s Ken Eastwood, VERGE’s Lina Bowden and Adam Spence, MARS
Ken: So maybe you could start off Lina talking about what was social finance is and what part of that plays into social enterprise - what are those two things?
Lina: Yes, of course. Social enterprise is really a business that has a social or environmental purpose at its core. We're really finding new innovations in the way that people address some of our biggest social problems and social enterprise is one of those ways. As social enterprises grow - like any business - they need capital to scale and grow and social finance is an innovation that allows us to find investors who are interested in making social investments.
Ken: Adam is founder of SVX. First of all, what is the SVX? What's the history between SVX and Pillar Nonprofit Network?
Adam: Certainly. SVX supports and connects impact investors and social enterprises that are seeking capital. So think of us as the marketplace or a platform where folks are able to raise capital and find and make impact investments or opportunities to build the capital in order to generate purpose, as well as return. We've had the good fortune of working together with Pillar Nonprofit Network for the better part of the last five years to get an understanding of the potential and opportunities for social finance and social enterprise in the London community. They started with a small fund available to give loans to startup or early stage social ventures. Now the Breakthrough Fund is a really great opportunity for investors to participate as well. We are really pleased to announce this 2 million dollar fund that provides support and financing to social enterprises and organizations in London and southwestern Ontario.
Ken: So what is it that makes VERGE Capital so unique? Why is this such a special thing then?
Adam: I think there's lots of reasons it's special. One is, London is a pretty special place. When we think about the kinds of partners that are around the table for this work – it is impressive. You have what we have been calling ‘nuns and angel investors’; organizations like Sisters of St. Joseph and Ursuline Sisters and then traditional angel investors are coming together alongside the financial institutions and community organizations. So it’s the collection of partners that I think is really unique in that it's led by folks like Lina. I mean she's done an outstanding job for the past five plus years to build that marketplace. There are so many entrepreneurs that are building business models to tackle problems and doing that in a way that is successful, profitable not only for their own financial bottom line but for the good of the community. The partnership that we have between Toronto-based SVX and Pillar and the other organizations is a true win-win collaboration, contributing our talents, expertise and experience to do more together.
Ken: I think there's a lot of really unique and positive things about the work you're doing and as you said Lina building on the work that Pillar and you have already done - this partnership really is more of a partnership than just between Pillar and SVX correct?
Lina: There are a lot of partners in this. That's correct. So as Adam mentioned, we've been at this work for probably more than five years. London Community Foundation, Libro Credit Union, Sisters of St. Josephs and in the early days United Way have been pivotal partners in this work. But what we really were forming was a sort of a collective that was wanting to come together to look at how, as a group or as a community, create a framework for social finance and that's what we've been doing for the last five years. We've also had a lot of support from the Ontario government. Since 2014 we have received two rounds of grants from the Ontario government specifically around social finance. The Ontario government has been very interested in growing the social finance capabilities of our Province. They believe in the idea that we can create investment opportunities for investors to not only invest the way they do traditionally but also create a space where investors can invest with impact and most importantly I think invest those impact dollars locally.
Ken: That's the key to this as well.
Lina: That's right. There’s a saying that people ‘give where they live’ in terms of philanthropy. Well impact investing is not philanthropy - it's actually investing with a return - but at the same principle holds: that people will invest in the communities where they live. One of the barriers to this work is that there is a big misconception that when people invest with impact, they are not likely to get their money back because the organization will simply convert it to donations. That is not true. These impact investments hold as much credibility as other investments in the main stream investment world.
Adam: I mean I think the opportunity in the market generally for investments that have a triple bottom line is significant and growing and that's in local investments and opportunities that have been successful there. At Innovation Works they issued a community bond to raise capital; this has successfully delivered a financial return to investors AND generated an incredible community asset for Social Innovation organizations. This impact investing market across Canada is massive: nine point two billion dollars is invested in this way across the country over 100 billion dollars around the world. I think more and more people want to invest this way - whether it's millennials or recent retirees they want to see the financial return of their dollars but they want to see meaning and impact associated with their money as well.
More and more people are being socially and environmentally accountable, asking questions like: “where do we eat?” “Where do we buy”. They are also thinking “where am I investing and what is my money doing to people and planet and they are thinking “I want to do good locally”. Textbooks for Change and Old East Village Grocer are great examples of enterprises that folks are already investing in that could see a local impact as well.
Ken: I'm glad you mentioned some of those end results of where the money is going. Let's talk about where the money comes from. How can people invest in this?
Lina: OK. The Fund we have created uses what is called a ‘unit trust’ structure. This allows us to pool investor monies to help them diversify. Miller Thomson, our legal counsel, have helped us with this. Because of the structure, we are limited to accredited investors. This means that investors have to have larger investment portfolios or higher salaries to qualify based on Ontario Securities Commission rules we are bound by.
Ken: It sounds like a fantastic program and you're right. Any time you can make an investment and see like a triple bottom line is a great thing. Thank you so much for being here. Lina appreciate you coming in as well. Thank you to you both. Again you can visit Pillar Nonprofit website if you want to get more details.