A task force on investing for social benefit, not just financial returns, has delivered a report that makes several recommendations for governments, investors and other organizations for fostering impact investing in Canada.

Impact investing is defined as proactively investing in businesses, organizations or funds that generate both a social or environmental and financial return.

On Tuesday, the Task Force on Social Finance published a report highlighting seven main recommendations for encouraging impact investing, mobilizing private capital for public good in both non-profit and for-profit enterprises.

“This report forms the foundation of a strategy for achieving large scale change, requiring concerted action by many players,” the task force says. “Successful implementation of this strategy will rely on the experience and know-how of our own pioneers like Chantier de l’économie sociale in Quebec, as well as the collaboration of leading financial institutions and foundations, together with federal and provincial/territorial governments and, of course, impact investors.”

The report recommends:

> public and private foundations invest at least 10% of their capital in “mission-related investments” by 2020, which would potentially amount to $3.4 billion;

> federal government partner with private, institutional and philanthropic investors to establish a national fund, the Canada Impact Investment Fund, to support existing regional funds to reach scale and catalyze the formation of new funds, and that provincial governments should also create these sorts of funds where they haven’t already;

> investors, intermediaries, social enterprises and policymakers develop new bond and bond-like instruments to kick-start the flow of private capital;

> federal and provincial governments mandate pension funds to disclose responsible investing practices, clarify their fiduciary duties, and provide incentives to mitigate perceived investment risk;

> modernizing regulatory frameworks to ensure charities and non-profits are positioned to undertake revenue generating activities;

> the formation of a federal-provincial, private-public working group on tax policy to study ways to encourage private investors to provide lower-cost, patient capital that social enterprises need (the report highlights three proven tax-incentive models), in time for 2012 federal and provincial budgets; and

> eligibility criteria of government-sponsored business development programs targeting small and medium enterprises should be expanded to explicitly include social enterprises.

The task force was chaired by Ilse Treurnicht, CEO of Toronto’s MaRS Discovery District, and includes: Sam Duboc, founder of Edgestone Capital Partners; Stanley Hartt, chairman of Macquarie Capital Markets Canada; Tim Jackson, partner with Tech Capital; former prime minister, Paul Martin; Tamara Vrooman, CEO of Vancity Credit Union; and, Bill Young, president of Social Capital Partners.

IE