Entrepreneurial and Creative Society Roundtable
August 29, 2016—Toronto, ON
Entrepreneurial and Creative Society
Hosted by Ilse Treurnicht
Area of Focus
To take advantage of Canada's opportunity to become a leader in promoting social enterprise and social innovation.
- How can we foster a culture of social innovation, entrepreneurship & finance?
- How can we scale social innovation, enterprise and finance?
- What can government do to enable social innovation/enterprise and finance?
The session involved a wide variety of participants from across Canada's social innovation ecosystem, including government, academia, the private sector and the not-for-profit sector. The underlying focus concerned how to create a coherent narrative of social innovation that brings it into the economic mainstream as a viable driver of growth and inclusive innovation. Participants, divided into roundtables, discussed how government, in partnership with the sector, can co-develop and facilitate a thriving social innovation ecosystem with enabling frameworks and programs; adequate access to capital, and measurements that better capture social and economic value generated from social innovations. This field offers a unique opportunity to strengthen Canada's inclusive innovation brand globally, and draw on the interest of young people in purpose driven work. Corporate partners are also strengthening their engagement with community and non-profit partners—both bolstering their social license to operate and advancing business growth.
Summary of Discussion
Regulatory Frameworks: A key concern for the sector is the absence of an enabling regulatory environment for organizations with hybrid profit and social objectives. Attention was drawn to other jurisdictions (e.g. the UK and BC) that recognize and support businesses with both social and profit mandates. Participants suggested that companies seeking to generate a social impact are limited by rules in Canada that require them to be exclusively profit-seeking. Not-for-profits are limited in their ability to generate revenues even if they are redirected toward furthering their missions. This prevents such companies from being financially sustainable and scaling their operations and impact.
Measurement: Participants noted the difficulty of measuring social benefit and long-term cost savings created by social innovations. Improved data and communities for information sharing among social innovation practitioners was also cited as an inhibiting factor in attracting investment from mission-focused investors and government. Participants drew attention to emerging methods to quantify social impact used internationally, such as social return on investment (SROI), a principles-based method for measuring extra-financial value (i.e., environmental and social value not currently reflected in conventional financial accounts) relative to resources invested. Participants noted the role government could play standardizing and disseminating new social metrics across the sector. Additionally, participants felt that government should measure growth and innovation using more diverse metrics than GDP. Examples raised included having the government use measuring GINI coefficient and social progress index.
Growth: Participants questioned the assumption that social entrepreneurs cannot grow like other SME. While social enterprises may be more interested in social outcomes, this does not mean that they are not sustainable businesses. In fact, it was suggested that attention to social and environmental outcomes made social enterprises more disciplined and investment ready. Participants noted that government support tends to be oriented toward for-profit firms exclusively and that Canada's incubation ecosystem needs to do a better job accommodating the specific needs of these firms.
Education and Culture: Social enterprises and innovations are currently not treated as part of Canada's economic and cultural mainstream, which reduces the sector's larger impact, popular awareness amongst Canadian Population, and ability to attract and retain the best talent. Participants discussed the benefit of introducing students to social innovation at a young age and of promoting inter-disciplinary and cooperative problem solving when approaching or designing solutions to problems. Canada needs a culture shift toward entrepreneurship in general, must celebrate culture of innovation and take ownership of this space. Government was seen as having a role communicating the social brand and developing a narrative and celebrating social innovation through venues such as grand challenges.
Key Implementation Considerations/Challenges
Access to Capital/Government Programs: Government sources of funding and support are often seen as less accessible for Canadian social enterprises. Participants recommended that the government review its suite of SME programs in order to ensure that they are accessible and marketed to social enterprises directly. Moreover, participants believe there is a lack of patient capital that would help social enterprises scale, recommending that the federal government consider designing a "Venture Capital Action Plan" for social enterprises—leveraging the learnings from the global impact investing movement. Participants suggested that government policy should add additional social criteria to procurement processes, in order to ensure that federal procurement policy has a greater impact in Canadian communities. Finally, participants recommended the creation of a social innovation office that could possibly report into a new Chief Innovation Officer position in the federal government (or mimic the Office of the Third Sector in the UK). This position would be responsible for setting the government`s broad outcomes in innovation and social innovation policy and measuring performance against monitored targets.
Regulatory Changes: In line with the observation that Canada lacks an enabling regulatory environment for social enterprises, participants suggested Canada adopt legislation modeled off of the UK approach that would allow and reward firms that pursue both profit and social mandates. The Income Tax Act treatment of not-for-profits and charities' profit generating activities was identified as inhibiting and lacking clarity. It was suggested that government should encourage firms with social missions through tax incentives. It was also recommended that the government should do more to promote and encourage the Benefit Corporation designation among a wider range of firms.
Social Innovation Co-Creation Strategy: Participants, citing industry best-practices and the principles of iterative design, suggested that government adopt a cross-sector co-creation development strategy for social innovation. The ongoing strategy would focus on creating an enabling environment for social innovation by supporting, informing and networking policy processes across government and throughout the sector. This strategy would be created cross-sectorally and draw upon networked allies of entrepreneurs and practitioners in diverse sectors such as corporate, charitable, social enterprise, academia and social services from across Canada.
Social Innovation Cluster/Centre of Expertise: Roundtable contributors drew attention to the lack of support for social innovation in Canada's business accelerator and incubator ecosystem. Participants recommended that the government contribute to the creation of a social innovation cluster to disseminate best practices and attract the best social innovation talent to Canada.
Open funding for Social Issues: Participants proposed creating an outcomes fund specifically designed to tackle social or environmental issues that would be open to all organizational types, rather than restricted by incorporation structure. In addition, such a fund could provide funding to social enterprise vendors based on savings generated by projects or partnerships, such as improved energy savings or decreased utilization of social services, to help better capitalize successful social enterprise business models and promote scalability. There is an opportunity to leverage government investment with support from the private and community foundations, as well as forward looking corporate partners.
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