Liberals look at deployment of social finance fund to fight pandemic fallout

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The federal government is once again examining how quickly it will distribute hundreds of millions of dollars in aid to social services seeking to tap new sources of capital, especially as COVID-19 dries up traditional donations.The office of Social Development Minister Ahmed Hussen said the government was considering launching the so-called “social finance fund” given the pandemic.

The pandemic has had a profound financial effect on households, many of which have suspended discretionary spending on things like charity while economic uncertainty persists.

The Liberals had already set out on the path to providing new sources of revenue to charitable and nonprofit social services by connecting them with private investors to test new – and potentially cheaper and more effective – ways to provide their services.

The idea is that investors will spend money on projects to solve social problems, and the government will reward those investments if the projects work.

Liberals reexamine timeline for $ 755 million fund

Hussen heard an argument earlier this month to expedite the delivery of hundreds of millions of federal dollars to expand this socially responsible investment system and increase the amount offered to social service groups unaccustomed to launching investors to help them. to disburse money.

A spokesperson for Hussen said the Liberals are re-examining the timeline and approach for launching the social finance fund to help cash-strapped groups whose services are in high demand.

“The need to innovate for communities is all the more urgent in light of the COVID-19 pandemic,” Jessica Eritou said in a statement.

“We recognize that the COVID-19 pandemic has created financial and operational challenges that make it difficult for many organizations to innovate at a time when they are most needed.”

The purpose of social finance is to funnel private money into social services that governments typically provide themselves or pay for directly – sometimes inefficiently.

Instead of directly funding positions for specific groups in a company, for example, a group would use private funding to test a way to train marginalized workers with specific skills.

Government funds would flow if a project – like finding housing for people for whom the current programs have not worked – succeeds with detailed data.

The Liberals have set aside $ 755 million in a social finance fund and an additional $ 50 million spread over last year and this fiscal year to help about 500 groups build their capacity to take part in this growing field. .

The government had wagered $ 85 million annually on the fund over a four-year period starting this fiscal year, for a total of $ 340 million.

Groups want more money for capacity building

The speech Hussen heard in early July was $ 400 million over the next two years – more than double what the government had planned – to capitalize on existing and emerging fundraising groups, as well as led organizations. by aboriginal people.

Groups are also calling on the government to provide an additional $ 150 million to expand capacity building programs.

“If allocations are made to increase that amount to these capacity building organizations, then they can deploy a variety of support programs to support dozens, if not hundreds of businesses starting in the fall,” said Adam. Spence, CEO of Social Venture Connexion, who works with and connects investors, social finance funds and service groups.

Some of these social finance groups have seen their incomes drop by 70% due to COVID-19, reflecting similar declines in traditional giving to charities since the pandemic hit Canada in March, Spence said.

The money for the project would come next, with the goal of raising $ 800 million in private capital so that funding groups can invest in local projects and organizations in late fall, said Spence.

Accelerating and adding spending could help 10,000 social organizations to adapt to the crisis that COVID-19 created for them, and to maintain or create jobs targeting newcomers, young people, blacks and Aboriginal people.

“Each of these pieces will contribute to the tax base, but also and perhaps more importantly, tackle a host of social, economic and environmental challenges that we all face,” said Spence.

Nearly three dozen people from across the country attended a virtual meeting with Hussen earlier this month.

Spence said the group remained optimistic but also planned to redouble their efforts in lobbying local MPs throughout the summer.

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