Canada’s Spot on the G8 Impact Investing Totem Pole: An Interview with Ted Anderson

Social Finance - Mon, 06/17/2013 - 09:37

By Bronwyn Oatley

What’s your response if asked by the Cabinet Office of the Prime Minister of the United Kingdom to speak in front of an audience of international leaders in your field—mere days before you had expected to attend the event as a guest? If your name is Ted Anderson, you say yes.  

On June 6, Director of the MaRS Centre for Impact Investing Ted Anderson, spoke to an audience of senior government officials, business leaders, academics, and major philanthropists on behalf of Canada at the G8 Social Impact Investment Forum. Originally, Anderson had been asked to attend the event as an observer—one in a small group of Canadian experts—but plans quickly changed, when Minister of Human Resources and Skills Development Diane Finley was unable able to attend the event due to a death in the family. Consequently, Anderson was asked to prepare his remarks. Be ready, they said, to speak to representatives from eight of the most powerful nations on the planet, all there to discuss the common agenda of finding market-based solutions to social problems. 

The Social Impact Investment Forum was one in a series of topic-specific forums organized by the Cabinet Office of the Prime Minister, leading up to the G8 Summit, being hosted by the UK today and Tuesday. Though one of many, Cameron alluded that this conference held special significance, as a result of his own personal committment to social finance and impact investing. During his remarks, the PM demonstrated such a commitment with the announcement of the launch of three new initiatives: the Social Stock Exchangetax breaks for social investments, and “new help for communities to buy local assets.” 

But where is Canada in the social impact investing landscape? How did the United Kingdom get so far ahead? And is the Canadian government trying to catch up?  
For answers to these questions, SocialFinance.ca sat down with Ted Anderson upon his return home from the conference in London. 

The Back of the End Zone

“You know, if the UK is at the 20-yard line, we’re at the back of the end zone—behind them,” Anderson said, describing Canada’s position relative to the United Kingdom in its implementation of social finance initiatives. 

“Amongst G8 countries, we’re probably mid-pack, but Canada, and most other places quite frankly, are well behind the UK.”

Anderson described the long list of the UK’s accomplishments: the first Social Impact Bond (and now, more Social Impact Bonds than all other nations combined), the first Social Stock Exchange, and the first wholesale social investment bank—Big Society Capital

How did the UK get so far ahead? 

“They just decided they wanted to be,” stated Anderson, plainly, “and it appears to be a passion of David Cameron's.”

The UK also has one key ingredient that Canada, among other nations, is lacking—a Sir Ronald Cohen. During his presentation, Cameron described Cohen as the “grandfather of social investment,” an Egyptian-born multi-millionaire, who has dedicated years and a substantial portion of his own wealth to the development of social finance in the UK. Cohen was the Chair of the Social Investment Task Force, Co-founded both Bridges Ventures andSocial Finance UK, and currently serves as the Chairman of Big Society Capital

Does Canada Have a Sir Ronald Cohen? 

“I don’t think we have a Cohen,” Anderson said. “At least not a Sir Ronald Cohen with the ear of Stephen Harper.” 

“I think groups like ours, like MaRS, are starting down that road, but I think that we need a consensus in our community—be it the foundation community or the program provider community—that [impact investing] would be helpful and useful...[and] I do think that you need to find a Sir Ronald Cohen or a senior politician who has the belief that this is the right thing to do—the bureaucrats aren’t going to do it.” 

“This requires a big, big philosophical shift in the Canadian philosophical climate” 

In Canada, the Harper government has piloted six social finance initiatives across the country, and has served mainly in a facilitation and advisory capacity, bringing together experts from a variety of cross-sector communities to discuss the potential of social finance at the federal, provincial and municipal levels. 

In May, the Ministry of Human Resources and Skills Development (HRSDC) also released the Harnessing the Power of Social Finance report, a document that provides an overview of the some 154 community-submitted responses to a “Call for Concepts for Social Finance,” issued by Minister Finley in November 2012. 

Yet, such overtures pale in comparison to the initiatives undertaken by the Cameron’s government. 

“I think that there are a lot of other priorities that they have in that government; understandably, [the HRSDC] is a big department, and they are responsible for a lot of different programs,” said Anderson. “I know it’s getting a fair amount of bandwidth at certain levels, but I think that there are also a lot of other parts of government that need to be convinced—like [the Ministry of] Finance and [the] Treasury.”

After all, social finance at its very core requires collaboration—across government ministries, sectors and industries, and in some cases, across provinces or nations. 

“You need to have a proper program that the government officials understand, that the service providers understand, and that the people providing the financing understand...The Canadian government is very slowly, very pragmatically, trying to understand how it can look at an outcomes-based financial model at the federal and provincial levels...but this requires a big, big philosophical shift in the Canadian philosophical climate.”

Forging Ahead 

According to Anderson, the greatest challenges Canada faces in the establishment of a broad, coordinated social finance marketplace are: “an acceptance of concepts,” and “the establishment of standards of measurement.” Yet despite these and other hurdles, Anderson remains optimistic. 

“It’s encouraging that this is on the G8 agenda, and in Canada—it’s coming. The B Corp movement is gaining momentum, and young entrepreneurs are increasingly seeking a balance between being socially and financially responsible.” 

“While we’re not seeing it a lot on the funding side; other than the foundations, your typical private-equity and venture capital funds are still ‘financial optimization-driven,” you know, over time that just may change too.”

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Note: SocialFinance.ca is one of the programs of the MaRS Centre for Impact Investing, of which Anderson is the Director.