Bring haves, have-nots together, report urges

Chris Cobb | OTTAWA CITIZEN | JANUARY 24, 2011 

OTTAWA — On one hand there is big business — hungry for profit but not above throwing the occasional bone to charity.

On the other hand there’s everything else: A dirty environment, climate change, the homeless, the unemployed, the unemployable and any number of other social ills and needs.

The gulf between the haves and the have-nots needs a bridge, according to a newly-released report from the Canadian Task Force on Social Finance, that can only be built on a foundation of modernized rules and regulations that in their current form are restraining Canadian innovation.

The report, titled Mobilizing Private Capital for Public Good, says that the two silos of big business and social need can be brought together in a win-win situation.

Profit and social need, says the report, are not mutually exclusive.

It’s a mistake to think that corporate Canada is populated by people who don’t worry about the environment or care about the disadvantaged, says Tim Draimin, executive director of Social Innovation Generation (SIG), which formed the task force.

“It isn’t a question of whether the rich care,” he says, “but how we erase the line between the profit generators and environmental and social needs. There isn’t enough money in charitable coffers or government to meet the needs. We need to create a way to bring more capital to the table.”

The 10-person task force included former prime minister Paul Martin, Stanley Hartt, a corporate executive and former chief of staff to prime minister Brian Mulroney, and Tim Brodhead, president of the J.W. McConnell Foundation.

The task force’s seven recommendations include changes to rules governing charities and non-profit groups that would allowing them to go into business and generate revenue to make their enterprises self-sustaining.

Canadian charities are currently not allowed to compete directly with private-sector business. But in other countries, this restriction has been lifted or loosened.

The task force also recommended a review of tax law to make it more attractive for private investors to invest in social enterprises that benefit the environment and projects such as low-cost housing that benefit more marginalized members of society.

And it also wants Canada’s public and private foundations to invest at least 10 per cent of their capital in so-called mission-related investments.

The group gave its report to federal Finance Minister Jim Flaherty in December, ahead of his meeting with provincial finance ministers. He agreed to give each of the ministers a copy.

Across Canada, there are moves toward bringing private enterprise into the social arena.

British Columbia has the country’s only Parliamentary Secretary for Social Enterprise, and public and private foundations are looking at ways to encourage social enterprises.

There is a group called Action Canada pushing Green Bonds — modelled after post-war Victory Bonds and Canada Savings Bonds — where the government would guarantee a rate of return and the money would go to “green” energy projects.

Other countries, such as the Great Britain and Australia, are ahead of the game and already marrying private money with social need in many sectors — notably low-cost housing and a variety of job-creating initiatives.

The whole idea is built on the concept that business can make a profit and help make the world better in the process.

Draimin points to New York’s Robin Hood anti-poverty project as a good example.

“We have retrograde rules and regulations in Canada that are badly articulated and leave the impression that non-profits can’t be entrepreneurial,” he said. “The rules need changing.”