Philanthropy has long been a cornerstone of Canadian society, with individuals, foundations, and corporations generously supporting a wide range of causes, from education and healthcare to poverty alleviation and environmental conservation. These philanthropic efforts have made a significant impact on communities across the country, providing essential funding for essential services and programs.
Social impact investment encompasses a range of approaches, including impact investing, social enterprise, and community development finance. These approaches leverage capital markets to fund initiatives that address pressing social and environmental challenges while also providing financial returns to investors.
While philanthropy and social impact investment share a common goal of creating positive social and environmental impact, they have traditionally operated in separate spheres, and view one another with some skepticism, or as competition. Having had the opportunity to be involved with social purpose organizations that harness the power of both funding approaches, there is much that each sector can learn from the other, and developing the ability to move with ease between both will only increase your organization’s impact.
The sales process required to secure major social impact investments is very similar to the qualification, cultivation and solicitation work we invest in securing major gifts. It starts with a vision for impact and the search for values-aligned leaders. If a potential social impact investor is not interested in your cause, it’s unlikely they will select a non-traditional investment vehicle to grow their wealth. The fundamentals of successful major gift fundraising can inform the sales process for those offering social impact investment products.
Further, that everyone working in the social profit sector gains from increasing their financial-market savvy and understanding of various investment and lending products that can make the difference between getting it done and the impact that might-have-been.
Additionally, collaboration between philanthropy and social impact investment can help to unlock new sources of capital for social and environmental initiatives. Philanthropic organizations (especially those with healthy endowments) can serve as anchor investors, providing catalytic funding to attract additional investment from the private sector. By de-risking investments and demonstrating the viability of social and environmental initiatives, philanthropy can help to mobilize capital at scale and drive significant impact.
Moreover, collaboration between philanthropy and social impact investment can foster innovation and experimentation in the development of new financing models and impact measurement tools. By sharing knowledge and best practices, these sectors can learn from each other’s successes and failures, accelerating the pace of innovation and driving continuous improvement in the field.
However, there is still much work to be done to fully realize the potential of collaboration between these sectors. This will require a shift in mindset, from competition to cooperation, and a willingness to embrace new models of engagement and partnership. It will also require investments in capacity-building, relationship-building, and trust-building efforts that foster collaboration and ensure that all stakeholders can contribute meaningfully to shared goals.
As Canada seeks to address pressing challenges, including the housing crisis, the collaboration between philanthropy and social impact investment has never been more important. By working together, these sectors can leverage their respective strengths and resources to create innovative solutions, drive systemic change, and build a more just, equitable, and sustainable future for all Canadians.
