Thank you very much.
Thank you, Chair and committee. Thank you for letting us appear by video. It is a bit of a bittersweet day today; we couldn't come up to Ottawa as the founder or MaRS, John Evans, passed away on Friday. So we have just returned from his funeral. Thank you very much for allowing us to do this by video.
MaRS, as you probably know, is a registered charity and is one of the world's largest innovation hubs. People often ask us why MaRS is involved in social finance and impact investing. MaRS started off as a support for the entrepreneurial community, particularly around health care. It expanded to clean tech and information communication technologies. I think there was a recognition that the innovative types of solutions that we require to support an entrepreneurial community are no different in the social innovation sector or social entrepreneurship sector. So four or five years ago the MaRS Centre for Impact Investing was created.
It has been supported primarily through philanthropic efforts, primarily through foundations as well as some corporate support, so people like the McConnell Foundation, the Royal Bank, the Hamilton Community Foundation, and others. The centre has striven to be the thought leader in Canada around impact investing and to provide services to a variety of groups and individuals. We provide services to governments, foundations, charitable organizations, and others that are trying to get into the impact investing world. We spent a good chunk of the past three or four years working on education. Most recently we have moved toward actually seeing money flow and working with individuals, foundations, corporations, and others who are actually moving money in the impact investing and social finance world.
We have been very fortunate to have had some wonderful support from governments across Canada. The federal government, as you may know, participated in a process through the G-8. Under David Cameron's leadership, the G-8 struck a task force on social finance, and I've had the privilege over the past year of serving as Canada's non-governmental representative on that task force. Siobhan Harty, from the ESDC, who I know presented to the committee, has sat as Canada's government representative. We've worked alongside ESDC over the past year and a bit on that task force. I will come back to the recommendations we're going to be making today that come out of the work of that task force.
Since 2010 the Centre for Impact Investing has published several reports. We have made those available to the clerk of the committee. They include a 2010 Canadian Task Force on Social Finance report. They include a report on the state of impact investing in Canada, the most recent being the September report of Canada's advisory board to the G-8 task force. So those have all been made available in both French and English through the clerk of the committee.
Why do we exist and why are we thrilled to be here with you today? In simple terms, the challenges we face as society need a new approach. You as parliamentarians are dealing with budget constraints particularly around things like health care and social services. I think you would acknowledge the innovative approach we have taken as a country toward things like our entrepreneurial approach to business, our entrepreneurial approach to innovation, requires that same type of approach to deal with some of these large social issues, whether we're talking about homelessness or poverty reduction. We think it requires a new, innovative approach and it requires us to access some funds that are not currently available in the space.
Judith Rodin who is the head of The Rockefeller Foundation has a quote, and I am going to get it somewhat wrong, but she essentially says that the issue is not that there's not enough money to solve all the problems we have, it is that the money is tied up in the stock markets as opposed to being invested in what we would call mission-related investing. We are happy to touch on that.
I know Siobhan took you through some of the basics of social finance and what role governments have. I think one of the important things to point out to a parliamentary committee is that social finance is not a replacement for public social expenditures, it's complementary. In some cases, particularly around some of the examples Sarah will give you, we actually think it can make public expenditures more efficient and do more and put governments in a position where in some cases they are only paying based on outcomes. We'll talk about exactly what that means to us.
So, where are we in Canada? One of the great things about having sat on this G-8 task force over the past year is getting a sense of where we sit on the global landscape. I think it's fair to say that we are at the leading edge of the second wave. The United Kingdom and the United States would be ahead of us. We're leading the next wave of countries, but it's growing at a very, very small pace. There's a role for government, particularly federal government, to play in providing some catalysts to free up capital for impact investing or social finance.
This in many ways is no different from the role government has played in some other sectors, such as venture capital. I spent ten years running a venture capital firm investing in early-stage technology companies. I think some of the recommendations we'll talk about from our task force follow what happened in terms of the role Canada played in jump-starting the venture capital sector.
For us, the government's role really falls into two categories. One is unlocking capital, and the second is providing an enabling environment. I mentioned the G-8 task force. Each country that participated was asked to form a national advisory group. We convened 24 thought leaders from across the country to become Canada's national advisory board. That group put together a report that we released in September of last year. The report broke down our recommendations into two sections. The first section dealt with regulatory change. These are things that will have no impact on the finances of the country, but would create an enabling environment allowing foundations, charities, and others to be more innovative, to be more creative. The second part of the report made some recommendations that do have a financial cost. Let me take you through two of each.
First, we think the federal government has a role to play in putting capital to work alongside others' investment, not doing this alone but being an impetus for others. What do I mean by that? It means that you could follow the example you've done on things like the venture capital action plan, what Nova Scotia did with their community economic development investment funds, and what the Government of Canada and the Government of Quebec did with the Chantier de l'économie sociale, where government said they would not be the only player in the marketplace but would match private sector, foundation, or charity financing. You could put in place a matching program, or you could put in place a fund-of-funds program, where you actually provide a significant amount of money that then could go to intermediaries, who would then invest it in the impact investing space.
That recommendation addresses two challenges that we think exist. The first is that some investment managers struggle to get enough capital in the social finance or impact investment space, because people are still unsure about the marketplace and unsure about this new method of investing. We think government can play a role in providing catalytic capital.
Second is that some of the large pools of capital, such as pension funds, that have the ability to actually transform and change some of the challenges we're facing simply cannot find vehicles that are big enough. That's why we think a fund-of-funds approach is one possibility, where you would see the fund-of-fund alongside large pension funds, much as has happened in the venture capital space.
In both of those cases, the task force did not get into the specifics of what the mechanism should be—i.e., should government provide first-loss capital, should government provide tax relief, should government provide tax credits? We have said that this requires further consultation with the sector. I think the key is that government has a role to play but not to stand alone.
Let me now ask Sarah to take you through the second financial recommendation, and then a couple that are non-financial.