Social finance tools offer several benefits, and can help organizations:
- Launch a viable initiative that cannot be funded from current cashflows (e.g. purchase an asset or launch a program before all funds are raised or saved)
- Do things more efficiently (e.g. purchase a building rather than paying rent)
- Invest in activities that can generate revenue (e.g. launch a social enterprise)
- Better manage their uneven cashflows over a period of time
Some common ways community organizations use social finance approaches include:
- Purchasing a building or other asset. Example: Four local community agencies purchase a new building. They receive a patient capital loan, allowing them to co-locate and renovate a downtown building instead of renting—the mortgage payments cover an asset (the building) rather than an expense (rent).
- Growing to a new location or launch a new line of business such as a social enterprise. Example: A women's transitional housing organization recognizes that it has real estate management competencies and will use these skills to set up a company whose profits will subsidize the organization—they access a start-up capital loan for the social enterprise.
- Funding operations and smooth financial flows. Example: A non-profit has successfully delivered a government contract, but is waiting for the final payment to be released. A social finance fund provides a bridge loan to cover its payroll until the government contract is paid out.
The following case studies describe how different nonprofit organizations have undertaken social finance strategies. Please click on the links below to learn more.
Atira Property Management
Atira Property Management (APM) is a social enterprise of Atira Women’s Society providing a range of financial, administrative, and physical property management services throughout the Vancouver area. When APM decided to scale their impact by incorporating a social hiring strategy, they secured two loans from Social Capital Partners that were friendly, offered at preferred interest rates and with simple, straightforward terms. Read more...
Kitchener’s THEMUSEUM aims to be a premier cultural destination in the region, but they were burdened by cash flow issues. Attracting and creating exhibitions frequently required deposits of tens of thousands of dollars up to a year before an exhibition opened, when revenue could be gained through ticket sales and sponsorships. THEMUSEUM secured a loan that met their exhibition and expansion needs. Read more...
The Toronto YWCA recently issued a community housing bond (promissory note) worth $1 million as part of their fundraising strategy for a new site on Elm Street in Toronto. The bond was set at a 4% fixed interest rate over 10 years, and was purchased by the Muttart Foundation, a private foundation based in Edmonton. In leveraging social finance, the YWCA was able to save significant money due to the lower cost of borrowing this option presented. Read more...