Evidence of meeting #45 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was finance.
A recording is available from Parliament.
5:10 p.m.
Conservative
The Chair Conservative Phil McColeman
Thank you very much.
Mr. Cuzner, sir, the floor is yours for five minutes.
5:10 p.m.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Thanks very much, Mr. Chair.
Thanks to the witnesses. There have been some great insights.
I want to follow up with you first, Mr. Etmanski. I respect your comments and the work you've done. The disability tax credit is one. I agree that it's a great initiative. I lost a brother about 10 years ago who had cerebral palsy, and I know that my parents spent most of their adult life concerned about what was going to happen after they passed on.
I know that they would have taken advantage of the disability tax credit, but both of my parents worked. Many persons with disabilities in the country.... I've heard this time and time again. You're not saying—I would appreciate your comments—that the tax credit can be the be-all and end-all. Look at the changing of the eligibility for OAS from 65 to 67. We know about the disproportionate amount of hurt that brought upon the disabled in this country, the low-wage earners and the disabled in this country.
You're not saying that the government abandon support for these people. It's just that you see the merit in this type of social financing.
5:10 p.m.
Founding Partner of Social Innovation Generation, and Co-Founder, Planned Lifetime Advocacy Network
On the disability savings plan, I don't think anyone would argue that the revenue from individual disability savings plans is going to be enough for anyone to live on. It complements the current supports that we provide through our welfare system.
But I am saying that the hidden benefit of the disability savings plan that we've noticed is that now some provincial governments are beginning to rethink their whole welfare approach to disability. Because there is no requirement to report, and there is no policing through the disability savings plan, they're beginning to wonder now why they need to have social workers or welfare workers who are simply monitoring on a monthly basis the very limited resources that people with disabilities get. They're beginning to ask if they can rethink how we support people with disabilities and move it more into this asset framework and away from a welfare framework.
That's why I'm encouraging this kind of bolder thinking. It's the greater challenge. All of these social finance tools by themselves are not going to reinvent the system. We are a caring country. We allocate significant resources in this country, but I don't think they're as targeted. Social finance gives us an opportunity to bring in business discipline, to leverage other resources, and to make existing government allocations more targeted so that they go directly to the individual. That's the bold opportunity: to reinvent our framework of care in this country for the 21st century, because what we're currently using is almost 100 years old and it has all kinds of assumptions that no longer make sense.
5:15 p.m.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Mr. Aitken, you had talked about education, and even Mr. Emmett had talked about educating the next generation of contributors. But when you're so close to the ground here with institutions, on the whole concept of social enterprise and social financing, are we seeing an institution that's doing a real good job? You guys are coming in and doing this outside of curriculum, but are there social schools that...? Mr. LePage did a presentation earlier, and he said that building business skills within social workers in this country would be a great asset.
Are there some schools that are doing it right?
5:15 p.m.
Director, Programs, Enactus Canada
Yes. I think it's definitely progressing, and it is progressing more quickly now.
I'll give you an example. My alma mater, Memorial University in Newfoundland, is actually introducing an MBA program in social entrepreneurship. I talked to the dean, Wilfred Zerbe, and he told me that because of the Enactus program and what we've been doing and the value and the skills they've been learning, they will be introducing that program. They received a $500,000 grant through the McConnell Family Foundation to make that happen.
I know that Ryerson University is doing a ton of work in social entrepreneurship and social innovation. They are recognized as the first Ashoka U Changemaker campus in the country. They obviously have a pretty tremendous Enactus presence as well.
We're definitely seeing the trend in terms of more programs that are doing it; it's just not across the board.
5:15 p.m.
Conservative
5:15 p.m.
Conservative
Jim Eglinski Conservative Yellowhead, AB
Thank you.
I'd like to thank the presenters for coming out and spending time with us.
I will be pretty blunt and pretty straightforward here. All three of you have basically been talking about social finance, but you're all on a different level of what you're looking at. I'll start off with Mr. Etmanski, but this question is for all of you.
I want to clearly ask you what role you see the federal government playing. I know we play a role already—we've helped and assisted—but what's the most important role we can play in your program?
5:15 p.m.
Founding Partner of Social Innovation Generation, and Co-Founder, Planned Lifetime Advocacy Network
There are a couple of things. One, a lot of the existing tax apparatus is pinching on the ability of social entrepreneurs to do what they want to do. I realize that other people have presented on that, so I won't get into that in detail, but I was a founding member of Social Innovation Generation, or SIG, which essentially launched the social finance task force in Canada. I'm quite sure you have that. That's a fairly straightforward approach, I think.
The bigger role, I think, is for our government funding as it's currently allocated to be leveraged with the other sources of revenue. I'm sorry for repeating myself now, but my fear is that social finance will come out from our federal government and only be seen as “We'll give you the money if you can find other players who will match it”. That is such a limited perspective on what social finance can do.
Somebody mentioned the McConnell foundation. They're a leading private foundation in Canada. They have now spent 15 years trying to think how they can leverage very little money to maximize the impact they are having, and they are proving to be effective. That's what we'd like to see our federal government do as well. Perhaps we could launch some social finance funds that are set up in a way that encourages this new mindset I talked about at the beginning: new ways of working together, new uses of technology to achieve scale, to address these substantive challenges we have in Canada, which we seem to be throwing more and more money at within the existing mindset while the problem only gets worse.
I hope I'm answering the question here.
5:20 p.m.
Director, Programs, Enactus Canada
I completely agree with what was just mentioned. From our perspective—obviously we work with youth, so I'm going to talk to that—we see the ability for the government to build the capacity of the organizations that are out there.
To give you the example of our organization, we're 97% privately funded. However, there are so many different opportunities and things that we're looking to do. We're one of many that are working in this space and doing great things. From my perspective, in terms of building the next generation of leaders who understand the terminology involved, who understand social finance, and who understand social enterprise as an opportunity, I obviously believe that this is where there's an opportunity for the government to play a role.
5:20 p.m.
Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada
I come back to my main point, that charities and non-profits are a really important component of the economy. I'd like to see the government treat charities and non-profits more as small businesses and be eligible for the small business financing program and the Business Development Bank's small business loans. There are recent examples of loosening the criteria to allow charities and non-profits to participate.
Second, I think the Income Tax Act needs to be looked at with respect to constraints on earned income activities of charities.
Third is data. One of the things we were talking about is the difficulty in defining results and therefore attracting capital. We can't do that without data and an adequate census.
Fourth, one of the things social impact bonds cannot do that only the government can do is redistribute income on a large scale. It's really important from the charitable and from the social justice point of view that the federal government maintain its commitment to those large redistributive programs.
5:20 p.m.
NDP
Marie-Claude Morin NDP Saint-Hyacinthe—Bagot, QC
Thank you.
Mr. Emmett, in your presentation you talked about how the non-profit sector is growing much faster than GDP. If we exclude social enterprises and look only at community organizations and charities, that is bad news, because we can see that needs are growing in our society. I don't know if you agree with me.
You also said that more resources will be needed because of that. There are problems. Stable, adequate, sustainable funding is needed. In that case, would social finance become additional revenue? Would it completely replace government funding for community organizations and charities?
5:20 p.m.
Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada
Thank you.
There are about 85,000 charities in Canada and about 85,000 non-profits, so taking out charities from the larger picture reduces the numbers by around a half. The hospitals, universities, and so on continue to grow more quickly than the economy, and I think the point we're making is that growth is driven by demand; people need and are in growing need of what charities provide.
I think you're right in the sense that charities can only grow to the extent that the funds are there for them to grow, and that means we're going to have to be very aggressive about looking at all different sorts of financing, including donations, governments, earned income activities, and social finance. No one source will be able to provide financial stability in the charity world.
5:20 p.m.
NDP
5:25 p.m.
Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada
It certainly is not a global answer. I don't think you could say “we'll not rely on government and we'll rely on social financing”; that is just unrealistic.
5:25 p.m.
NDP
Marie-Claude Morin NDP Saint-Hyacinthe—Bagot, QC
Thank you. That answers my question.
Mr. Etmanski, when you talk about social finance, you are talking about a new financial tool, a new way of looking at community services, if you will, by getting to the roots. You talked about prevention.
I'd like you to elaborate on that, please.
5:25 p.m.
Founding Partner of Social Innovation Generation, and Co-Founder, Planned Lifetime Advocacy Network
I don't see social finance as a tool; I see it as a way of thinking about how we use our money.
We will continue to need donations. We will continue to need community foundations and private foundations in Canada to allocate their grants. We will continue to need government to allocate resources to our toughest social challenges. We hope we will have more and more business partners providing their investments here.
Finally, the social enterprise sector itself is earning lots of revenue, so those are five streams of resources.
One of the challenges is that those money streams don't talk to each other. They operate, to a large extent, in parallel. So social finance is a way of thinking about how to leverage these resources to maximize impact. That's the real issue.
I hope that clarifies your question a little bit. If I've missed something in there, please tell me.
5:25 p.m.
Conservative
The Chair Conservative Phil McColeman
Thank you for that answer.
We're going to move to Mr. Wallace to close it out.
Sir, you have two minutes.
5:25 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
My question is for Mr. Emmett and Imagine Canada.
First of all, I have to be frank. We do agree with you. My wife works for Easter Seals and raises money for disabled kids in Ontario in our area, so we understand the challenges.
I believe there is a considerable difference between social enterprise and social finance.
I know what a coupon rate is, and I know what a regular bond looks like in terms of being able to figure out what its return is. Tell me, what does the coupon rate or this community bond they're talking about look like? For a potential investor, how is it defined? I don't understand.
5:25 p.m.
Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada
That's a very good question.
In terms of social impact bonds, most of what you see are relatively small demonstration projects. They are sponsored by government, and government has guaranteed rates of return to the private investors.
For the one I'm familiar with, on Rikers Island in New York on recidivism, I believe the private investor is JPMorgan Bank. They've been guaranteed a rate of return of 20%.
5:25 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
My second and very quick question is, on the stretch tax credit, why are you not just advocating the change from 15% to 25%, instead of hoping that the 15% to 25% and the 28% to 38% will encourage people who have already given, to give more? I don't understand why you just don't go for a better rate than for a stretch.