The countdown to launching social impact bonds in Ontario is underway

The good news is that the start line for the first social impact bond to be developed in Ontario and brought to the market is within sight.

And when the line appears, investors will be able to purchase a fixed income security that combines a financial return plus a social return – provided, of course that positive measurable outcomes are achieved. “Money is at risk, given that returns are based on outcomes,” said Susan Manwaring, a partner at Miller Thomson whose practice is advising organizations in the social and community sector.

Manwaring said social impact bonds and a social enterprise strategy, which have been used elsewhere, “are ideas and new instruments that people are saying ‘why don’t we see if we can make this work.”

Manwaring, who has been on panels that have advised governments on social impact investing, added there is a potential upside: more resources may be put into areas or projects where it can be shown the outcomes are positive.

The idea, she says, is to match up that desire for a new approach by governments, which fund the services, and enterprises, which deliver the services, with those investors who are not merely motivated by a financial return. “Those investors are interested in knowing that their money is having an impact. And they might free up more capital knowing that the way it’s being used is directly having an impact.”

Manwaring’s firm worked on the country’s first social impact bond launched in 2014 by the Saskatoon Downtown Youth Centre. With $1 million provided by a financial institution, Conexus Credit Union, and the husband and wife team of Wally and Colleen Mah, the investment was earmarked for at-risk single mothers. The mothers and their children were supported by the service provider, which allowed the mothers complete their education and secure employment. If those objectives are achieved, the government funds the provider, which in turn repays the investors.

One-year back 14 mothers and 20 children were in the program that is known as the Sweet Dreams project. The provincial government estimated that the savings would be $0.5 million – $1.5 million over five years. This year construction started on a child-care facility at the centre.

Ontario’s approach

The provincial government has spent considerable time researching the topic.

As part of that work –and remembering that the MaRS Discovery District has set up a Centre for Impact Investing – ideas have been canvassed: in 2014, for instance, it received 83 ideas from 79 organizations. Those ideas –which focused on three main areas; housing and homelessness; youth at risk and improving employment opportunities for persons facing barriers – have been analysed into an original short of four projects and a final short list of two. This year, the two projects were identified:

  • Mainstay: This service provider wants to sell bonds to “provide stable housing and intensive support to 100 chronically homeless individuals,” specifically those who have been homeless for at least five years.
  • The RAFT: This southern Ontario based provider wants to develop a project for at-risk young people, designed “to increase high school graduation rates and improve housing stability.”

Ontario said this week that a “series of milestones” remain on the path to implementing the two pilot projects. Those milestones include “completing investor market sounding” to gain market insight on investor interest as well as testing the two frontrunner projects.

Financial Post

bcritchley@nationalpost.com

Leave a Reply

Read the original at News – Financial Post.