Government of Canada celebrates the launch of the $755 million Social Finance Fund in Quebec with Fonds de finance sociale - CAP Finance

MONTREAL, June 12, 2023 /CNW/ - Social purpose organizations, such as social enterprises, non-profits, charities and co–operatives, are at the forefront of tackling Canada's persistent social and environmental challenges, and they are key contributors to the Canadian economy. Since the 1980s, communities and organizations in Quebec have rallied around the concept of social finance to create a well-organized and mature social economy.

Today, the Minister of Families, Children and Social Development, Karina Gould, joined representatives from the Fonds de finance sociale – CAP Finance in Montreal to celebrate the groundbreaking launch of the $755 million Social Finance Fund, which is a long-term initiative to advance the growth of the social finance market in Canada. The Social Finance Fund is a foundational element of the Social Innovation and Social Finance Strategy, along with the Investment Readiness Program and the Social Innovation Advisory Council.

Social innovation and social finance play a fundamental role in tackling persistent challenges such as access to affordable housing, food insecurity and poverty. By increasing access to flexible financing opportunities in the social finance market, the Social Finance Fund will help social purpose organizations grow, innovate and enhance their social, economic and environmental impacts. They will also extend the reach of social finance to underserved populations, sectors, and regions in Canada, including rural and remote communities and the North.

Fonds de finance sociale – CAP Finance was announced as one of three fund managers for the Social Finance Fund on May 29, 2023 and will invest specifically in Quebec's unique social finance ecosystem to expand the social finance market in the province, including by increasing access to social finance for equity-deserving groups and for non-profit social purpose organizations. The other fund managers, Boann Social Impact and Realize Capital Partners, will invest in the rest of Canada.

The three fund managers will receive $400 million over the next five years to invest and are expected to leverage up to another $800 million in private investment to foster the market's growth and long-term sustainability. This will provide investors with opportunities to engage in socially responsible investment and to direct their capital toward public good initiatives. Funds will be invested in existing or emerging social finance investors, which are financial entities that raise money from investors to make social finance investments, using innovative and complementary strategies to sustainably grow the social finance market and to expand flexible financing opportunities for social purpose organizations. Fund managers will allocate a minimum of 35% of their investments into initiatives promoting greater social equity, including a minimum of 15% into initiatives promoting greater gender equality.

The Social Finance Fund will help Canada achieve the United Nations Sustainable Development Goals. Canada is advancing the Sustainable Development Goals to build a more prosperous, healthy and sustainable future for all with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. By increasing the accessibility and flexibility of financing opportunities in the social finance market, the Social Finance Fund will help social purpose organizations grow, launch new programs, and serve the critical needs of diverse communities in Canada.

Quotes

"The Social Finance Fund is an innovative and first of its kind program. Through this Fund, the Government of Canada is investing in, and supporting the growth of, a vibrant social finance market. As the sole provider of the Social Finance Fund in Quebec, Fonds de finance sociale – CAP Finance will further expand the strong social economy that has been thriving in the province since the 1980s. By investing in the Social Finance Fund, we are enabling social innovators to succeed, as they lead the way in building a more prosperous and inclusive economy that works for all Canadians. I look forward to seeing the positive impacts the Social Finance Fund will have for Quebec and its diverse social finance ecosystem."
– Karina Gould, Minister of Families, Children, and Social Development

"It is with immense pride that we welcome our appointment as a manager of the long-awaited Social Finance Fund. This fund confirms the importance of social finance in building economic growth that's based on equity and shared prosperity. Taking into account the specific characteristics of the Quebec ecosystem, we are determined to include social finance intermediaries and investors who place a high value on the impact of their actions, in order to develop this ecosystem."
– Nathalie Villemure, President, Fonds de finance sociale – CAP Finance

"The Fonds de solidarité FTQ applauds the Government of Canada's strong action in creating the Social Finance Fund. With support for the social economy being at the heart of the Fund's mission, we know that this investment will have a considerable impact on the development of social purpose organizations and will benefit the entire community, while strengthening Quebec's social finance ecosystem."
– Saloua Benkhouya, Vice-President of Private Equity and Impact Investing Services, Fonds de solidarité FTQ

"As Quebec's leading financial institution for the social and solidarity economy, the Caisse d'économie solidaire Desjardins has been involved with CAP Finance since its beginnings. We have therefore had the privilege of playing an active role in the evolution of this unique network, which stands out as much for the diversity as for the synergy of its members, who have always known how to come together and join forces to collectively meet the needs of communities by guaranteeing an accessible, equitable and human financial model. Today's announcement testifies to the federal government's confidence in and recognition of our network, and the new Social Finance Fund is excellent news for all equity-seeking communities in Quebec."
– Martin-Pierre Nombré, Director of Strategic Development, Caisse d'économie solidaire Desjardins 

"In a 2021 report, the pan-Canadian Table of Impact Investment Practitioners described the State of Social Finance in Canada as one of 'impatient readiness.' Today, Boann celebrates the launch of the Social Finance Fund and its recognition of the transformative power of social finance as a deliberate and generative investment in a more just and inclusive, sustainably thriving economy."
– Christelle François, Chairperson, Table of Impact Investment Practitioners on behalf of Boann Social Impact

"I am thrilled to be here in Montreal today on behalf of Realize Capital Partners to celebrate the launch of the Social Finance Fund in Quebec. As a national fund-of-funds manager, Realize Capital Partners will be investing in ventures and fund managers across the country, including in Quebec. We look forward to working alongside Fonds de finance sociale – CAP Finance and leaders in the Quebec solidarity economy to address the social and environmental challenges that we face collectively."
– Chelsea Longaphy, Portfolio Manager, Rally Assets on behalf of Realize Capital Partners

 Quick Facts

• The Social Finance Fund is a long-term program that will run until March 31, 2039. Most of the funds are expected to be repaid at the end of the program. Fonds de finance sociale – CAP Finance will receive $89,808,426 in funding for the period of 2022–23 to 2025–26.
• Fonds de finance sociale – CAP Finance is a network of financial institutions and organizations that are working in Quebec and focused on the social economy and solidarity-based finance. Led by the Réseau d'investissement social du Québec and the Fiducie du Chantier de l'économie sociale, nine key investors are involved in the project.
• According to the latest data from l'institut Statistique du Québec, the social economy in Québec is made up of 11,200 social purpose organizations that generate just under $50 billion in revenue and account for 220,000 jobs in the province.
• The social economy is a socioeconomic driver in Quebec. Diversified networks of organizations and individuals support growth and promote the sector's contribution to community development. Its ecosystem is based on consultation and representation bodies that coordinate the efforts of various components.
• Designed through a social equity lens, the Social Finance Fund aims to reduce barriers faced by equity-deserving groups in accessing flexible financing opportunities. Fund managers have committed to the 50–30 Challenge and will work toward gender parity (50% women and gender-diverse people) and more representation of equity-deserving groups (30%) in their governance and senior leadership.
• The Investment Readiness Program was a $50-million program over two years starting in 2021–22, designed to help advance social innovation and social finance in Canada.
• The Social Innovation Advisory Council is an advisory group consisting of leaders and experts from across the social purpose, social innovation and social finance sectors. The Council provides strategic advice and subject matter expertise to the Government of Canada to help advance the Social Innovation and Social Finance Strategy.
• From August 12 to September 29, 2021, the Government of Canada held a competitive call for expressions of interest to act as fund managers for the Social Finance Fund. A comprehensive assessment resulted in the selection of three investment fund managers by the Minister of Families, Children and Social Development.
• The Social Finance Fund is a $755 million program to be deployed over the next 10 years. Fund managers are eligible to receive both conditionally repayable contributions and non-repayable contributions:
• conditionally repayable contributions are used for investment activities, to invest in social finance intermediaries and, in rare cases, to invest directly in social purpose organizations; and
• non-repayable contributions can represent up to 10% of the total funding request and are used to cover expenses such as administrative costs and blended-finance and ecosystem-building activities.
• In recognition of economic reconciliation as an important step toward Indigenous reconciliation, $50 million of the $755 million Social Finance Fund was allocated to the Indigenous Growth Fund, which is an Indigenous-led and self-determined fund managed and distributed by the National Aboriginal Capital Corporations Association. The remaining $705 million of the Social Finance Fund will be deployed by the fund managers into the social finance ecosystem.
• The Social Finance Fund has access to $400 million from the available $705 million, over a period of five fiscal years (2023–24 to 2027–28). Employment and Social Development Canada must return to the Treasury Board of Canada for approval to access the remaining funding allocated to the program ($305 million).

Associated Links

Social Finance Fund Backgrounder
Social Finance Fund Timeline Backgrounder
About the Social Finance Fund
Social Innovation and Social Finance Strategy
The 50–30 Challenge: Your Diversity Advantage
Social Finance Fund Hub
Canada and the Sustainable Development Goals
Fonds de finance sociale – CAP Finance

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SOURCE Employment and Social Development Canada

media enquiries, please contact: Philippe-Alexandre Langlois, Press Secretary, Office of the Minister of Families, Children and Social Development, Karina Gould, [email protected]; Media Relations Office, Employment and Social Development Canada, 819-994-5559 [email protected]