SOCIAL What is social finance?
Social finance is an investment that seeks a measurable social, cultural and/or environmental impact as well as a financial return for the investor(s). It stands in contrast to grants and donations, which do not require a financial return; it also stands in contrast to traditional investments, which typically emphasize financial returns only.
What could social finance mean for the charitable sector?
Social finance could reduce charities’ reliance on grants by providing money that helps them to acquire new assets, maintain positive cash flow, and develop new, self-sustaining revenue streams. This can help shield charities from the volatility that comes with relying on a single source of revenue and can give these organizations greater autonomy.
There are risks, however.
Some charities that take on social finance may struggle to pay back investors. There is also the risk of “mission drift” if organizational resources are diverted towards the pursuit and management of social finance. If charities are interested in seeking social finance, many will have to think and act differently. They will, for example, need to develop business models that allow them to deliver social, cultural and/or environmental impacts and financial returns. An edited excerpt from Imagine Canada, “Are Charities Ready for Social Finance?”, 2020
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month. Even with these commitments, Matthew House believes in paying employees a living wage. “One of our core values is human dignity and all of the work that we do is done in a way that provides dignity to the people that we serve,” says Allan ReesorMcDowell, Matthew House Ottawa’s executive director. “I was aware of the living wage program from a previous employer and we were already paying staff above minimum wage. All of a sudden, we're sitting around the board table one day and thinking, ‘Yeah, why aren't we doing this?’” While one of the ways his organization remains focused on dignity is to pay staff a wage that allows them to afford basic necessities, Reesor-McDowell notes there is another equally important reason to pursue the ent is increasing. Food costs are up. And even certification. though Ontario’s minimum wage increased “By providing better compensation consistently, we again this fall to $15.50, for many it doesn’t go can retain quality employees, which is really important far enough. for our organization,” he adds. “People have a lot of That’s why some non-profits and other different hats that they have to wear and we need really organizations have been lobbying for years solid people to do the work. So, the question for a “living wage” — a calculation of what becomes, how do we treat people so they a family of four with two parents each want to stay?” working full-time year-round would Sam Laprade, fundraising consultant need to make to cover the costs of and host of An Hour to Give on CityNews living in their community. Ottawa, points to the work that most Generally, the living wage is charities put into retaining donors, which noticeably higher than the minimum can be a difficult and expensive task, wage. The Ontario Living Wage Network perhaps to the detriment of focusing on calculated the living wage in Ottawa as internal resources. $18.60 per hour in November 2021. The Allan Reesor-McDowell “The topic of how we treat staff has network publishes a list of living wage come up more in the last couple of years employers. To be certified, employers go through an than it did in the first 28 years of my career,” she says. application process, are licensed by the network, and “We do a disservice to the sector, to its people and to pay a fee. They’re also subject to regular reviews. donors when we underpay staff and equip them with There are currently 15 certified Living Wage outdated tools.” employers in Ottawa, including the Ottawa Humane At Matthew House, programs have been running up Society, the Ottawa Outdoor Gear Library, the Parkdale against capacity limits and the natural instinct in that Food Centre, and Matthew House Ottawa, which situation might be to fundraise more in an effort to do provides shelter, furnishings and community to refugees more and continue to grow. But Reesor-McDowell notes and those transitioning to permanent housing. his organization is taking a big picture view of how it can Matthew House currently maintains four full homes grow in a healthy and sustained way that does not burn and is looking to increase to seven by year’s end. It also out staff or volunteers, benefits clients and staff, and furnishes up to 100 homes for refugee families each ensures the continuity of the organization. In keeping with that mindset, Matthew House offers employees health benefits, matching retirement contributions and paid vacation time. Even ReesorMcDowell was able to unplug for two weeks this summer. “We're willing to make these investments because we're in it for the long term,” he says. “I never unplugged during my first four years on the job. It was especially hard when we had so many disruptions to our programs on a weekly basis during the pandemic but actually disconnecting from work felt amazing and I’m encouraging our staff to take time to do that as well.” Matthew House hasn’t left volunteers out of the equation. When Reesor-McDowell joined the team in 2018, he noted volunteers were burning out as they were covering staff roles due to inadequate staffing. It’s a work in progress, but leadership continues to look at which core roles need to be staffed and which roles are best filled by volunteers. “It’s looking at ways to treat people fairly,” he says. “If we’re relying on them day-to-day or regularly, we want to compensate that person as a staff person, retain them over the long term, and treat them well. Volunteers can show up less regularly because we don’t want to burn them out. That’s been part of the journey over the last few years.” — By Phil Gaudreau
NPOs that pay a living wage see benefits for many stakeholders
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GIVING GUIDE 2022
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