Public Safety Committee on June 12th, 2014

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

If we had something like social financing and social impact bonds that help reduce crime and relieve society and the victims of crime of their misery, that would be a good thing regardless of whether somebody made a few dollars on it or not, because the end would be a reduction in misery. I think that's what you meant when you talked about value added as opposed to cost savings.

[Kevin McNichol]

That's correct.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

If I told you that there was no intention on the part of the federal government to reduce its commitment to crime prevention but rather to look at different ways to get better results, especially results that would have value added, would you not say that's worthy of exploration?

[Kevin McNichol]

I think anything that would expand our ability to mobilize resources from our community, we have to look at. That community includes government, but it also includes the private sector. It includes the foundations that Ms. Shaw was talking about.

We don't have enough resources to meet the demand and the need. We have an untapped potential in terms of corporate and private donors. We've heard about the philanthropy that does exist—Tim Hortons is the example I heard earlier. I think we have a fairly good vehicle in terms of accessing those philanthropies. This is another type of vehicle that may open up new opportunities to raise more money and provide more money on the ground to support and make change.

I think the positioning of the investors is also a choice. Investors have a wide range of potential choices to invest their money in. I suspect most of the investors that would come in here, much like with the green bonds that already exist, are not interested in making money hand over fist; at least, that is not going to be their primary motivation. It is the social good that will be created. If there is an added benefit where they can get some type of return on their dollar, I think it is an interesting way of inciting—I mean incenting—other areas or other investment into our social fabric.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Yes, I would agree. Inciting those extra dollars would be exciting, as far as I'm concerned.

One of the other issues we were looking at, of course, is the government's aversion to risk. Governments tend to have an aversion to risk. In other words, in terms of the valuable tax dollars we deal with, we want to make sure that, to the extent possible, whatever we do yields appropriate results, not only crime reduction but shows some real reduction.

I was very pleased to see, in your program, a 75% reduction in police services and a 70% reduction in child and family service investigations. This was as a result of taxpayers' dollars. Am I correct?

[Kevin McNichol]

We started with National Crime Prevention Centre funding. Our first four years were primarily supported by that federal government grant. We continue to produce those results, 14 years later. So that, I would suggest, is a very good return on investment.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Are you still getting that amount of money from the same source?

[Kevin McNichol]

No. We do not have federal funding at this point.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Who's funding you?

[Kevin McNichol]

About 80% of our funding comes from the Government of Alberta. We are supplementing that with additional dollars from foundations, United Way, and private philanthropy.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

That's good to hear.

So basically the federal government brings in a program in the province of Alberta. You prove that investment is a good investment. The federal government tells you to go and look for more sources. The Government of Alberta sees it's a pretty good investment, so takes it over

What's to prevent someone else coming in and saying, “Government of Alberta, you can divert the money you're spending with these folks, because we'll take it over, but what we want to see is...”. You said that for every dollar invested, $6.31, in other words $16 million value added back to the Government of Alberta. What would be wrong with an entity that funded you, to the tune of x number of dollars—whatever it costs you to run your program—receiving a profit or a bonus for investing in you, and the contract saying that if you don't get these results, you're not going to get any money back. The government doesn't lose out on any money. You don't lose out on any money, because your program is still on the go. Who loses out basically is the investor.

Tell me some bad things about this, because that's what this committee wants to hear. Not only do we want to hear the good things, but also we want to hear any of the cautions that may come out.

[Kevin McNichol]

I think you outlined the potential opportunities that might be available.

Some negative consequences that may come from that...and I'm not sure they're negative. I think they may lead to improved capacity and professionalism amongst the non-profits.

I talked about this earlier. We need an oversight body, which I believe is government, to make sure the entire social safety net is still adequately being supported and that certain organizations.... If we were wildly successful and were to receive this, I would hate to see us continue to get funding at the expense of other areas that are just as critical. The key issue with this stuff is that we have to float all boats in order to be successful, and someone needs to have that oversight piece.

It is true that people put their money in what they value. But if they're unaware of other areas—and I think about the breast cancer example that I used—then those areas need to be managed and looked after by government. If we don't, then we will have gaps and a patchy social safety net, as I think another member has talked about, and that will be a problem.

[The Chair, Conservative, Daryl Kramp]

Fine, thank you very much.

Thank you, Mr. Norlock.

Now, Madame Doré Lefebvre, it's your turn.

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Thank you, Mr. Chair.

Mr. McNichol and Ms. Biollo, thank you for contributing to our study today and for speaking to us about social finance. Your input is very much appreciated.

Ms. Biollo, I am going to start with you.

I have your presentation in front of me, and there's a statement that reads as follows:

There appears to be opportunities for social impact bonds to support programs that [the Edmonton Police Service] is involved with, specifically around supporting vulnerable and victimized persons, heavy users of services, and hard to house high risk offenders.

I'd like to know what led you to believe that social finance could be used to support activities of that nature. And at the same time, do you think there are sectors where social finance shouldn't be used?

[Jacqueline Biollo]

Thank you for the question. I am going to answer in English.

One of the things that is unique to the Edmonton Police Service is that we have many partnerships. Our main goal at the end of the day is allowing the Edmonton Police Service to respond to more appropriate calls.

We are certainly involved in the social makeup of the community, in the inner city in particular, where you have victims and vulnerable individuals.

I think that moving forward, social impact bonds allow us to identify opportunities where an investor might acknowledge that, whether it's family violence or heavy users of service.... But they're looking at the front end, assisting in an education and prevention opportunity. They would buy into perhaps assisting to alleviate the stresses of community organizations or the policing resources as a reactor or a reciprocal of these systemic barriers.

We continue to explore, not only through our proven data analysis or calls for service but through our long-standing partnerships. Then on building the intermediary, we talked about Finance For Good and their guidance on where they might be able to find investors that are poised for success in allocating dollars toward a prevention, education, and awareness initiative.

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Thank you.

I'd like to ask Mr. McNichol the same question.

You also covered it in your presentation. You talked about the importance of accepting the fact that not all areas will benefit from the social finance type of funding. Could you elaborate on that point please?

You gave breast cancer awareness efforts as an example. That illustrates the point well. Could you tell us about your efforts to combat domestic violence and the types of things that should and shouldn't be done?

[Kevin McNichol]

I'm not sure there isn't anything that can't be funded by this type of model. I know that differs from what the previous presenter talked about.

The reason is that I don't think we're being creative enough in measuring the impact on the issues. If we get creative—and I think that's one of the exciting possibilities here—you could probably measure impact on just about anything you do.

The example you might use.... My organization is focusing on the justice response, and recidivism as the big social impact we measure. But I think it's more important to measure what is happening to the children in those homes and their graduation rates from school, because we know that the social determinants of criminality are often related to education and the ability of kids to have an education and get a job. We also know quite clearly from the social literature that kids who grow up in homes where there is domestic violence tend not to have the same social outcomes when it comes to their long-term development.

It's a matter of creatively thinking about how we measure a social issue and what impact we are trying to achieve. If we can link those, you can measure, but it does require creative thinking.

At this stage I think there are some things where you're looking more at structural or infrastructure issues that an organization may not have the capacity to measure. They don't have the research capacities or the evaluation capacities, or they may not have the support of local government or their ministries that may be tracking some of those larger pieces of data that they would need to demonstrate their social models. Those are probably more the limitations than the actual ability to measure something.

We just need to wrap our heads around how creative we want to be.

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Is social finance the only way to achieve creativity and innovation? I know that organizations like yours really leverage innovation and creativity, as do other organizations the committee has met with as part of this and other studies. We are after all talking about a sector where stakeholders don't necessarily have any other choice. They have to rely on programs that work and they have to figure out what works. They have to learn from trial and error. Is social finance the only way the process can work? You can start by answering that question.

[Kevin McNichol]

As I said earlier, I don't think it is “the” answer. I think it is part of a menu of options. What for me is exciting is that it is a very new menu that may open up a broader range of resources that we can make use of. Our agency would be a demonstration of success. Government has invested and we have produced, and that investment has produced innovative results and evaluation data that shows impact. That's just one investment tool, and this would be another example of an investment tool we could use, should we as social agencies find a way to endorse it, empower it, and leverage it.

[The Chair, Conservative, Daryl Kramp]

Thank you, Ms. Doré Lefebvre.

Ms. James, go ahead, please.

[Roxanne James, Conservative, Scarborough Centre, ON]

Thank you, Mr. Chair.

Thank you to both of our witnesses.

I'm going to start with Mr. McNichol. In your opening remarks you talked about exploring new social financing models, and you stated that there were a number of financial models, one of which might be social impact bonds, which hold a great deal of promise. You mentioned that one specifically. Can I ask why?

[Kevin McNichol]

We've also worked with Finance for Good, which Jackie talked about in her presentation. It is a model that has been talked about, and I think it's probably, of the various types, the most widely known. I know of some other vehicles that work on similar concepts of trying to engage investors in new ways in which they are providing some type of social return. There's a group in Calgary looking at the homelessness issue, and poverty in particular. It has created a foundation and is inviting investors to come in and essentially create what I would describe as—and this is not the proper term—an endowment of sorts that would support poverty reduction initiatives and employment initiatives using private investor dollars.

Again, I'm not an expert in all the details of how those work, but it's a very interesting way of appealing to a different set of people with potential resources to input into addressing social issues. I would suggest that you're marketing to a different group that doesn't normally participate in these things or understand how they might be able to do it, but these are vehicles that do speak their language, if you will, and that are inviting to them.

[Roxanne James, Conservative, Scarborough Centre, ON]

We've heard from a number of witnesses who have clearly indicated there is a wide range of organizations, private corporations, philanthropic organizations, and so on, that are out there and are willing to get involved in social finance to do public good, but also, as my colleague mentioned, sometimes there is a return on investment. There's absolutely nothing wrong with that if it actually produces results.

From your experience, do you feel that there are organizations out there that are willing to step on board to do public good?

[Kevin McNichol]

Absolutely. I think you just need to look at the rate of philanthropy. I can speak only to Calgary, but we have an amazing philanthropy community. We also have a very strong business community, and a lot of times when we speak to them about philanthropy, they're asking us business questions, which don't necessarily go hand in hand, but this type of model and these types of processes start to speak their language. I think it could be very inviting for them.

The other piece you're seeing in philanthropy is a desire to have a greater direct line of sight. In other words, I want to see that my dollar actually produces something. I think that's what's exciting about this conversation—it's encouraging further evaluation and data to support your dollars making a difference. Whether it's tax dollars or private dollars doesn't matter. We want to know that we produce outcomes. Historically, most non-profits don't have the luxury of investing heavily in those types of evaluative and wide-scale evaluation data collections that demonstrate the real impact they have.

[Roxanne James, Conservative, Scarborough Centre, ON]

I think what you just said, that the dollars actually produce something, is very important to note. I think when you get into social financing and you're bringing in private investors, they're going to have a real vested interest in making sure the dollars are bringing in a return on investment, public good, and so on. Up until now, with many governments, it's almost as though a grant has been given to an organization, but the period of time for the project to take place elapses and there's really no evaluation done to determine what the return on investment is at that point. With social financing, you have the ability to do that.

You mentioned Finance for Good. We've also heard from this organization. I'm not sure if you're aware of that. They play an intermediary role in this whole scheme. I'm just wondering what you see the role of the intermediary as being and how they actually play into this from your perspective.