The Social Enterprise Fund leads the way with an innovative approach to community building
In the spring of 2015, Ione Challborn and her colleagues spotted a building they wanted to buy. Challborn is executive director of the Edmonton chapter of the Canadian Mental Health Association. One of CMHA’s goals is to provide housing for people living in poverty or with mental illness, but the kind of building they’re looking to acquire isn’t easy to come by.
“One, we need it to be in a location that’s very accessible by transit, because most of our tenants don’t have vehicles,” says Challborn. It also needs to be close to a variety of amenities: a grocery store, a library and various community services. “And we’d rather have a walk-up than a 20-storey building, because they create community within themselves with a smaller group of tenants.”
The building that Challborn and her colleagues found fit all those criteria. It was a 15-unit apartment building, just north of downtown that could provide safe, affordable, long-term housing for a significant segment of CMHA’s waiting list.
One big question mark, however, was funding. A traditional bank might back such a venture, Callborn says, but she wasn’t sure the nature of CMHA’s business would be fully understood there. She preferred a financier that supported CMHA’s endeavours to improve the quality of life of their clients, first and foremost – which is why they applied for a loan from the Social Enterprise Fund (SEF) instead.
Established in 2008 as a collaboration between the City of Edmonton and Edmonton Community Foundation (ECF) (along with additional funding along the way from the United Way, the Alberta Real Estate Foundation and several private donors), the SEF is a loan fund. But unlike a traditional bank, it deals in what is known as social enterprise or impact investing, which has a built-in mission component. As such, the SEF only invests in projects that it believes will make the community a better place.
“Usually, investing is considered successful if there is financial return,” says Jane Bisbee, executive director of the SEF. “We look for something that has more than just financial return. We look for something that’s actually putting good into the community.”
But what counts as “good?” Bisbee says they don’t have narrow parameters, and that’s by design. Initially, SEF took its lead from the sectors of interest of its founding partners, including social challenges, affordable housing, the environment, food security and the cultural community.
“We try to remain pretty open to what the contribution to the community might be,” says Bisbee. “We look to see if the organization has a clear mission for public good. What are they trying to do to improve citizens’ lives in the community, in a whole range of areas? We’ve invested in everything from food security to social work development to social housing to cultural organizations.” Keeping an open mind, in other words, gives the SEF more options, rather than fewer.
With approximately $25 million currently loaned to some 30-35 projects, the SEF has provided funding for several high-profile organizations around the city, from Citie Ballet to the Whitemud Equine Centre.
They helped Earth’s General Store open a new outlet in the heart of downtown, allowed Metro Cinema to purchase new equipment for use at the Garneau Theatre, and loaned Arts Habitat of Edmonton the money it needed to purchase Marshall McLuhan’s childhood home in Highlands and convert it into an arts and ideas centre.
And while mission is important in the SEF’s review process, it does not mean there isn’t serious assessment of the financial side of loan requests. There needs to be a strong plan that includes repayment of the loan, but the SEF may be able to take into account elements in a proposal that traditional banks can’t consider, structuring loans that work for the non-profit sector.
That familiarity with the non-profit world is what convinced Murray Soroka to come knocking on the SEF’s door. He’s the CEO of Redemptive Developments, a social enterprise that aims to alleviate poverty through employment. Its services include apartment cleaning, reclaiming furniture and moving services, and, in 2014, Soroka decided he wanted to expand the company’s junk-removal business as well. But to do that, they needed money to invest in more equipment, a couple of new trucks, and some new employees to get it all done.
So he applied for an SEF loan, and he got it. “That allowed us to grow our business and employ more people,” he says.
For Challborn and CMHA Edmonton, having her organization’s mission understood went a long way. “The non-profit sector is worth investing in,” she says. “And I think more traditional lending institutions are a little more hesitant to invest money in our growth. Obviously we had to do our due diligence, and prove we were a good investment, but the fact of it is that the SEF will invest in this sector.”
Soroka says actually working with the fund was just as positive. “It’s been incredibly easy, informative, and rewarding,” he says. “They were willing to take a chance on a not-for-profit,” he adds with a laugh. “It’s been a great experience.”
If your organization is considering a loan through the SEF, Bisbee suggests a few things to keep in mind when writing your proposal. First and foremost, it is important to have a clear plan for repayment. “We need to actually see that there is a revenue stream, either generated through the work that they’re borrowing the money to do, or [through] their activities,” she says. “That’s probably the most important criteria: Do they have a strong idea that’s actually feasible? And they’ve proven that it’s going to work?”
Second is the term of the loan – and the good news here is that the SEF is, again, flexible when it comes to timelines. Bisbee says they’ve approved loans as short as seven or eight months, and those lasting as long as 10 years. “It really depends on the situation,” she says. “We need to be able to get the right amount of money for the right length of time to the right organization.”
And third is making sure your funds will be used to improve life in your community and beyond. “We’ve done things as simple as helping someone move out of an inappropriate office location,” Bisbee says. “We’ve given loans to organizations so they can grow their operations into new markets that they never could reach before. [Or] changing a non-profit organization and expanding it into the community.”
Thanks to its loan from the SEF, CMHA Edmonton was able to purchase its coveted downtown apartment building in a matter of months. That new building won’t eliminate CMHA’s housing wait list all on its own, but for those 15 new residents, their quality of life is about to take a serious – and immediate – turn for the better.
“It’ll make a huge difference,” Challborn says. “They will have a place to live. Our model is long term and safe – it isn’t transitional housing. We are a very supportive landlord. We work very hard to support them in all their needs, not just their housing, in order that they can be successful.”
There are other community-impact funds across Canada, but what really sets the SEF apart is the clear support it enjoys from its parent organization. In 2010, the Canadian Task Force on Social Finance called upon all public and private foundations across the country to invest at least 10 per cent of their capital in impact investments over the next decade. For Martin Garber-Conrad, CEO of Edmonton Community Foundation, that wasn’t fast enough. “The case I made to our board was: ‘Why wait until 2020? Let’s make the commitment now,'” he says. “So we did.”
And as ECF’s asset base has grown in the ensuing years, so have the foundation’s efforts to stay at that 10 per cent benchmark – currently it has approximately $30 million set aside, with the goal of hitting $50 million by next year. But, Garber-Conrad says, it’s not only about hitting that financial target. “It’s the kind of investments we’re choosing,” he says. “They’re all going to be investments right here. A variety of different areas of work. Things that directly enhance our community.”
To apply for a loan for your enterprise, or for more information about the SEF, click here.