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

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OTTAWA – 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, particularly when COVID-19 dries up traditional donations. The office of Minister of Social Development Ahmed Hussen said that the government was examining the launch of the so-called “social finance fund” given the pandemic.

The pandemic has had a profound financial effect on households, with many discretionary expenses such as charities being suspended while economic uncertainty prevails.

The Liberals had already set out to provide new sources of revenue for charitable and not-for-profit social services by connecting them with private investors to test new – potentially cheaper and more efficient – 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.

Hussen heard a speech earlier this month to expedite the delivery of hundreds of millions of federal dollars to build this socially conscious investment system, and increase the amount offered to social service groups that are not accustomed to launching investors, to help them get the money.

A spokeswoman for Hussen said the Liberals are re-examining the timelines 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 channel private money into social services that governments are accustomed to either providing for themselves or paying directly, and 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, such as finding housing for people for whom current programs did not work, succeeded 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 invested $ 85 million annually in the fund over a four-year period starting this fiscal year, for a total of $ 340 million

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. , Managing Director of Social Venture. Connexion, which works with and connects investors, social finance funds and service groups.

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

Project money would then come, with the goal of attracting $ 800 million in private capital, so that funding groups can invest money in local projects and organizations starting in late fall , Spence said.

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.

Almost three dozen or three dozen people from Fogo Island to Vancouver Island participated in 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.

This report from The Canadian Press was first published on July 20, 2020.

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