Social Innovation and Social Finance

From: Employment and Social Development Canada

About social innovation and social finance

Social innovation is about developing new solutions to social or economic challenges. It can improve people’s quality of life through collaborating with new partners, testing creative ideas and measuring their impact.

Social innovation often involves collaboration across different levels of government, charities, the not-for-profit and private sectors to act on a common social issue.

By innovating socially, community organizations can find new solutions to enduring problems and share them with others across the country and around the world.

Social finance is a tool that seeks to mobilize private capital for the public good. It creates opportunities for investors to finance projects that benefit society and for community organizations to access new sources of funds.

Social finance investments:

  • involve access to capital that has a positive impact not only financially but also on society as a whole
  • can be made by different types of investors. These include charitable foundations, retail investors, credit unions, chartered banks, governments and institutional investors such as pension funds
  • can be made to a variety of organizations that seek to have a positive impact in their communities. These include registered charities, non-profit organizations, co-operatives and businesses that consider the social effects of their activities
  • can be made using a variety of financial tools, including loans, community bonds, equity investments and social impact bonds; and
  • can help non-profit organizations and charities become more successful. Though it does not replace traditional government funding, social finance can help organizations attract new financial resources to help them address social issues

Both social innovation and social finance can help more people, especially those most vulnerable, contribute to and share in the prosperity of their community and society.

For example, many social finance investments go to social enterprises that create jobs and opportunities for those who are under-represented in the labour market.

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