Thinking Big, Acting Small: Balancing the Drive for Scale in Impact Investing

If the Social Finance Forum is the leading event for impact investing in Canada, the session topics, and perhaps more importantly “the buzz” tells you where we are in this quickly evolving space.

Having attended the Forum for a number of years, this past month’s edition showed how the conversation about impact investing has swung all the way from why to how:

  • How do we bridge the gap between interested capital and the investment readiness of the social enterprise sector?
  • How does government play an enabling role?
  • How can models like pay-for-performance roll out in the Canadian context?
  • How can social finance be a tool in specific contexts like place-making, poverty-reduction housing or food security?

For our part, community foundations (Hamilton, Ottawa and Edmonton) hosted a session that spoke right to the heart of the market-building and alignment question. We touched on the visions behind our why and dove deep on our very different hows– discussing investment strategy and sourcing, the investment decision-making process, and attitudes towards risk and return, liquidity, etc.

But the hallways at MaRS also held a crosswind of concern about focusing on boutique opportunities and approaches: how will we get to scale with a flourishing of small funds and so many unique approaches? We need to spend our energy on coordinated and scaled strategies!

As a movement, community foundations are making our own transition from why to how. The notion that our investment strategies are part of accomplishing our mission is increasingly understood and accepted, but we aren’t yet at the tipping point in terms of action. Those that have taken the leap have done so with élan, most are still looking for their entry point.

In this spirit, Community Foundations of Canada is leading the way with the creation of the $1M Youth Catalyst Fund, a community foundation-led impact investing fund designed to act as a risk adjusted and capacity sensitive “first impact investment” vehicle for community foundations. Seeded with a grant from the Province of Ontario’s Social Enterprise Demonstration Fund, we have done some great design and structuring work with the MaRS Centre for Impact Investing, Deloitte and Miller Thomson. As we look ahead to making our first investments in early 2016, we can’t wait to share more soon.

To be sure, the Youth Catalyst Fund is part of an expanding universe of small funds and initiatives. And for us, at this moment, we think this makes sense. Individual foundations tend to take the leap when the right opportunity comes along: be it local, connected to a key impact focus, the right risk profile. Rationally, the impact-investing marketplace needs to get to scale and efficiency but new entrants still need opportunities that motivate them at a human level to get over their hesitations, create new pathways for decision-making and processes within their organizations, and take the leap.

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