Human Resources Committee on March 24th, 2015

[The Chair, Conservative, Phil McColeman]

Good afternoon, ladies and gentlemen, and welcome. This is meeting 48 of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. We're continuing today with our study exploring the potential of social finance in Canada.

Here to provide testimony for our first hour, we are pleased to have with us Mr. Naveed Chaudhry, executive director of the Peel Multicultural Council, and Mr. Jagdeep Kailey, the manager of settlement services. From the Ottawa United Way, we have Ms. Carole Gagnon, vice-president of community service. Finally, from the Eden Community Food Bank, we have Mr. Bill Crawford, the executive director, and Mr. Peter Costello, the director of operations in food skills.

After the first hour of witnesses, we will have an hour of committee business.

Let's begin. Each of your organizations has up to 10 minutes to present. I'll have you on a clock and I'll give you a one-minute warning when you are approaching your 10-minute maximum.

Why don't we proceed with whoever is going to present from the Peel Multicultural Council?

[Naveed Chaudhry, Executive Director, Peel Multicultural Council]

Thank you, Mr. Chair.

On behalf of the Peel Multicultural Council, its board and staff, I thank the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities for giving us the opportunity to present our social enterprise project to this committee.

I would like to take this opportunity to introduce our organization to the committee. Peel Multicultural Council, founded in 1977, develops and implements innovative strategies to help and empower newcomers, racial minorities, and other marginalized communities to obtain self-sufficiency. It's a charitable, non-profit organization that promotes a harmonious multicultural society and facilitates the settlement of newcomers to Canada.

We have a long history in the Region of Peel. Our three main areas of service are to assist the settlement of newcomers; promote ethnocultural diversity, equity, and equality; and build community capacity. This social enterprise falls into that third area of building community capacity.

As you can see, achievement-wise, in our history of about 38 years, we started actually in the area of public education and awareness, mainly in the areas of equity, equality, diversity, race relations, and social justice. We pioneered cultural sharing and appreciation through multicultural festivals and events, and encouraged civic participation by newcomers to Canada. This means that we have, I think, of all the regions, the highest percentage of those who were born outside to be elected to the federal and provincial parliaments. The participation level is pretty high in our area.

With regard to community development, we have established and assisted in the development of many community groups. We have developed neighbourhood services in the Meadowvale area. We have established 112 units of non-profit housing, which is now by itself under its own board of directors.

In the settlement area, we have been providing settlement services since 1985. We started with ESL job development, then language training, which is the LINC program. Now we have information, orientation, and referral services, job search workshops, enhanced language training with bridged employment, community connections for both youth and adults, and newcomer settlement programs.

These programs help the community of Meadowvale, where we are located, in the Streetsville—Mississauga riding of Mr. Brad Butt. We have been providing these services in a very efficient manner. We have seen our member of Parliament to be very supportive, and always for his community organizations very helpful and always working very hard for the community.

Services-wise, as I just said, we have language training and employment support. In employment support, not only do we provide them with training but we also assist them in placement and finding paired jobs also. We also provide newcomer settlement services funded by the province. This funding allows us to help those newcomers who have become Canadian citizens and can no longer access CIC-funded services. They access those services through this program.

Community Connections is where we connect new immigrants with already established and settled mentors from the area, so they can help them develop their networks and also guide them in the settlement process.

The social enterprise project of PMC is under development. I will go through where we are in that process.

The goal of PMC's social enterprise is an initiative to deliver excellent social service products and services and meet the needs of the community that are not being met with the currently funded structure; enhance our social mission; and contribute to the sustainability of PMC. So we get three things out of the social enterprise.

How did we get to this process? In early 2014 PMC decided to explore social enterprise as tool for addressing emerging service needs in the community, in our area, and sustainability for PMC.

We undertook three social enterprise ideas and conducted pre-feasibility studies: legal, immigration and allied services as as social purpose enterprise; computer training as a social purpose enterprise; and computer repairs as a social purpose enterprise.

Now, all of these areas are related to the strength of the PMC. The PMC has a very strong IT department also, so that's why we chose these areas. Based on financial projections—you will see those further down in the presentation—and also the closeness to the kind of services we provide, we chose legal, immigration, and allied services as our social enterprise .

Why do we think we are ready for undertaking this task? PMC management has undergone comprehensive training to develop and deliver social services. This training was provided by the Region of Peel. Orientation training for PMC board and staff was conducted to have them on board with the idea, so that the whole organization is behind it. PMC has incorporated this in its strategic plan for 2015-2020.

PMC conducted pre-feasibility studies, as mentioned earlier, and based on financial projections and alignment with our services, we chose this enterprise not just because we liked a certain idea; there was a rationale to do it.

PMC's staff already has certified paralegals, certified immigration consultants—though not practising in our current services—settlement workers, interpreters, and translators. We are equipped with the technical abilities that are required to deliver these services.

PMC has enough space in its current building to create a social enterprise office to deliver this service. We are well connected to the community. There are about 75 organizations that are members of PMC, and we ourselves belong to a number of networks, including OCASI, which is the umbrella organization for settlement services in the province of Ontario.

One of the reasons for choosing legal, immigration, and allied services as a social enterprise was that, through various community consultations, we learned that there's a need for cost-effective and approachable legal, immigration, and allied services in our community. A feasibility study was done, and that also aligns with it. This project is very close to what we do right now, and services under the social enterprise, as we said earlier, would be undertaken by registered paralegal and registered immigration consultants, so people can trust the service. Already PMC enjoys a high level of community trust for its services in the area.

Some of the services we plan to offer in each of the three areas of the chosen social service project are: small claims court; the Ontario Court of Justice under the Provincial Offences Act; summary conviction offences where the maximum penalty does not exceed six months; administrative tribunals, including the Financial Services Commission of Ontario; landlord and tenant services for small to mid-size landlords; and alternate dispute resolution services—namely, mediation and arbitration services.

[The Chair, Conservative, Phil McColeman]

You have approximately one minute left, sir.

[Naveed Chaudhry]

Okay.

Other products for immigration are completing forms, visitor visas, Canadian Experience, the provincial nominee program, visitors, and student visas. Students are a big chunk of the population in the educational institutions in our region. There are about 3,000 to 4,000 students at Sheridan College and the U of T Mississauga campus.

Allied services will be translation, documentation, interpretation, assistance in locating affordable housing, and arranging pick-up services from the airport for investor newcomers; this is a service in demand.

If you look at the financial projection, estimated revenue for three years is $468,000. Estimated ongoing costs will be $445,000 in the first three years. Estimated net profit of the enterprise in the first three years is $23,000. The enterprise will not require any financial assistance from funders in year three. The estimated net profit for the first five years is $141,000.

So in year five, we will generate about $70,000 of profit that will be reinvested in the community.

[The Chair, Conservative, Phil McColeman]

Thank you very much for your presentation.

Now we'll move on to Ms. Gagnon from the Ottawa United Way.

[Carole Gagnon, Vice President, Community Services, United Way Ottawa]

Good afternoon, ladies and gentlemen.

On behalf of United Way Ottawa, I am delighted to contribute to your discussion on the role social finance plays in Canada.

As we view it, social finance is about drawing in new participants and new sources of capital and creating positive and meaningful change in our communities. We appreciate that there is much to be done to seed this ground and to create an enabling legislative environment.

United Way Ottawa is also considering the role that social finance may have, as are many others of our colleagues across North America, and for very good reasons. Traditional ways in which we have been funding social issues are experiencing tremendous transformation. Many factors will continue to pressure government funding in the area of social service spending.

Another dynamic at play is the significant shift presently reshaping philanthropy. Donors are becoming less and less motivated to give based on the notions of charity and duty. Increasingly, they want to know what impact their contributions make, and we believe that’s a good thing.

All those elements bring us to the painful realization that investors in the social services sector can no longer tighten their belts and wait for better times.

We are all under increasing scrutiny to report back to our stakeholders on the results of our funding directions and decisions. The reality we have not yet faced is that the system we have collectively built to deliver social services in this country was designed for a time that has long since passed.

The juxtaposition of these two dynamics makes it challenging for all of us to collectively do differently with the resources entrusted to us. We therefore have a responsibility to invest in the evolution of the social service sector so that it may be responsive to changing needs, capable of measuring results, and accountable to donors and funders.

Given those dynamics, we are all wondering—at United Way Ottawa, and more particularly across the entire movement—how we can continue to finance our communities and effect change in them. How can we exercise leadership while helping our sector prosper?

I will confess that we are not yet sure if social finance is “the” answer. We appreciate that it is early days and risk is inherent. At the same time, United Way Ottawa has committed itself to exploring its potential. Here's why.

First, we see social finance in its broadest expression attracting new sources of capital that our sector will need. When we hear the projections of RBC and others in terms of the appetite for this kind of investment, it would be a mistake to leave the money on the table only for it to go elsewhere in time.

We certainly view private capital investment as an opportunity for new conversations with our long-time donors, many of whom we already speak to in investment terms. The potential to attract new stakeholders to our work is there as well and will require greater engagement of all sectors. Social finance vehicles, such as social enterprise investing and some of the most basic elements of social impact bonds, are areas where we have already begun experimenting, with strong results that are appealing. This brings me to my next point.

I believe you’ve heard from a number of previous witnesses—I believe you've had 48 meetings—that the social service sector in particular is struggling to be investment ready, which puts us at a distinct disadvantage in this new world. I would not presume to say that it is easier to demonstrate results in the areas of environment or health, where social finance vehicles are being similarly explored, but I do believe it is safe to say there is a far stronger foundation of evidence-based practices within these sectors.

The social service sector is only recently arriving at this place, due in part to the fact that funders have only lately been investing in it as part of our financial contribution. Ask anyone in the fields of health or environmental sustainability, and you will hear that research, evaluation, and measurement are part and parcel of the investment cost. When United Way Ottawa adopted an impact mission almost 15 years ago, I am not sure we appreciated what it would take to help our sector consistently and effectively measure the outcomes of our collective work.

Few measurement tools were available, and they were certainly not well understood, utilized, or applied consistently. It was possible to tell you how many people were in any one program, how many were on a waiting list, but we found ourselves very hard pressed to know whether those programs were contributing to the social outcomes that we were looking for.

Over the last few years, our capacity to roll up program reports is allowing us to begin providing community-level results. The measurement field is only now emerging for the social service sector. We believe exploring social finance tools will provide yet another framework and impetus to hasten this evolution toward impact measurement.

Lastly, social finance pushes at the boundaries of our traditional silo approach to social change. It has been demonstrated time and time again that very few complex social issues will be solved by any one sector alone. Our work frequently calls upon us to engage the strengths, assets, and perspectives of government, business, and community. We make the greatest progress when we are aligned. We also believe social finance will bring new partners to the sector.

In closing, I leave you with three thoughts.

One, philanthropy and government funding will not be enough for us to meet the social challenges facing us. We need to widen the pool of resources and sharpen the responsibility for achieving better results. Social finance may not be perfect, but it is a path worth serious examination.

Two, the social service delivery system we currently work within was built for another time, and it is unsustainable. It is a system we built. Now, as funders, we must help to reshape it in a responsible and sustainable fashion.

Finally, while it is very likely that the social finance instruments we are looking at today may evolve over the next decade, they will evolve only by practice and testing. The learning we can derive is greatly needed.

In each of these three instances, we will do our part, but we will need government to do its part as well.

Thank you for your attention. I would now gladly answer any questions.

[The Chair, Conservative, Phil McColeman]

We thank you for your presentation.

Just for clarity, this is our seventh meeting on the social finance issue.

[Carole Gagnon]

Oh, I'm sorry.

[The Chair, Conservative, Phil McColeman]

However—I'll explain—this is the 48th meeting in the 41st Parliament.

[Carole Gagnon]

I knew I understood “48” somewhere.

[The Chair, Conservative, Phil McColeman]

We count right from the time we start a new Parliament. So we've had 48 meetings, of which this is our seventh committed to this subject matter.

I just wanted to clarify that.

[Carole Gagnon]

Thank you for that clarification.

[The Chair, Conservative, Phil McColeman]

Mr. Crawford, will you speak on behalf of your organization?

[Bill Crawford, Executive Director, Eden Community Food Bank]

Yes, thank you.

Thank you to the committee and to our MP, Brad Butt, for inviting us to present on our work at the Eden Community Food Bank and to speak on social finance from the charitable perspective, from our perspective.

I'll start by telling you a bit of a story about my background. I was first called an entrepreneur about 20 years ago, after I founded and established a not-for-profit charitable organization for at-risk youth. At the time I said, “How can I be an entrepreneur? I am not a business person. I didn't start a business. I don't have investors.” But I did raise millions of dollars over the years to help homeless and at-risk youth to have a better life. I was, and I am now, what people have come to call a social entrepreneur. My investors are donors, and the return on investment I was promising and delivering was the social return of changed lives.

lt used to be that people found a charity they liked, one that did the charitable aims that they were interested in—for example, a refuge for abused women, or food for hungry people—and they made a donation without any expectation of any specific change or reporting on that change. The relationship was much simpler: the charity did the work and the donor made a donation to support that work, end of story.

Today there is a greater expectation that their donations will effect a change, often a specific change that is more long-lasting, and that the change or outcomes can be measured and reported. From individual donors to family foundations to the United Way and other major funders, all have begun to ask for outcomes and measurements towards the achievement of those outcomes. This has established a new dynamic, a two-way relationship with greater accountability to the charity's investors to report on the social return of their investment. I think the charitable sector and those who support it are ready for a change.

I'm from the Eden Community Food Bank, and we're in a time of transition. We are no longer just a food bank. We are changing from a traditional model of food banking—mainly food collection and distribution, a short-term response to the immediate need of hunger—to a new community food centre model that provides a more long-term and sustainable response to hunger, and hungry families, in western Mississauga. It's the social enterprise projects and also our fresh produce box program that are part of that new direction.

Charities are looking for new ways to generate income to expand their community impact. Donor dollars aren't as available as they once were. More and more requests to major funders often means that more organizations get less funding. Currently mostly of us are developing our own initiatives, working on proven models that we can find, and doing what we can. A national framework for developing social enterprise projects and making a social finance space or even a new corporate form, a new identity different from charity and from non-profits, would provide the foundation needed for that transition.

We also talked about measurement and how we measure. I believe a comprehensive, consistent, and universal measurement mechanism would also be helpful, because there are so many measurement tools out there. A unified measurement tool across the board would be helpful as social finance policies and programs are developed in Canada.

Current limitations to social finance come from the Canada Revenue Agency. The rules and regulations restrict a charity's involvement in social finance opportunities. There is confusion over what a related business is, and charitable boards are fearful of the CRA rules. The risk of losing their charitable status makes it difficult for charities to explore social finance opportunities.

I was an advisor on the start-up of a ministry to at-risk youth that operated a coffee shop, and when we applied for the charitable registration status, we were refused two or three times because they thought it was a failed business that was just trying to get a tax break, whereas 10 or 15 years ago it was on the forefront of this social enterprise trend and we were providing jobs for youth at risk.

The bottom line is that social finance in Canada is still relatively unknown. In the non-profit and charitable sectors there would need to be a lot more education on social finance and an easy-to-step-into opportunity for organizations to test the waters; basically more business-minded people with a heart for social development, where business and charity combine, to be able to work together.

One pitfall I see is that there are limited donation dollars available in Canada from businesses, foundations, and even individual donors. If we create a space where corporations can, instead of donating to a charity, invest with the idea of getting a return, that might take away from the donation dollars of Canada, so I just warn against that. Foundations are being asked to set aside a percentage of their funds for social enterprise projects. Again, that would take away from those charities that are asking for requests. Even for individual donors, given the option of making a pure donation with a social return or making a donation with a potential financial return, that's a hard choice to make for Canadians with their limited dollars.

I'll pass it over to Peter to talk specifically about our programs.

[Peter Costello, Director of Operations, Food Skills, Eden Community Food Bank]

Thank you.

I'm going to talk to you a bit little about the operational, about the groundwork that's happening.

We're in western Mississauga. We have about a quarter of a million people in our area that we serve. Of that, about 17%, or 40,000 people, would be considered potential users of the food bank system or as food-insecure. We deal a lot with what's called “modern malnutrition”. Modern malnutrition is the fact that we eat too much, too much energy, and we seem to store it a lot. We usually tend to eat the wrong things.

What we've done in our community is we've opened a learning kitchen where we bring in clients from the community...or people from the community, not just clients. We teach them how to cook healthy food. We do it for free and we let them take home the food. We get a lot of support from a lot of corporate organizations and from the community on that.

We also do a couple of social enterprises. One, which we've seen a lot of success with, is called the fresh produce box program. That's where we deliver food at a very discounted price to the people of the community. We're getting more fresh fruit and produce into the community. What that does is it helps us to help the community to fight a lot of the health issues and the human issues around food insecurity. I'm sure you know a lot of them already—obesity and malnutrition, high school dropouts, child well-being issues, and social mobility issues are all found around hunger and also around debt. We do that. We also have a social enterprise where we work with other charitable organizations that maybe have partial funding for food, like the Living Arts Centre of Mississauga. They go into the community and do their arts program and we provide the healthy lunches for these organizations. We get the revenue based on that. The fresh produce box program is a self-sustaining program where we sell just above our operational costs and that helps support our growth.

So that's kind of what we're doing. In terms of the challenges we have—I know we're kind of short on time here—although we are the largest organization fighting food insecurity, we are still only hitting about 0.6% of our population. And we are the largest one in that quarter-of-a-million people.

Our greatest challenge here is largely around building scale. That's what social financing could really help us out with: building scale. How can we effectively service the 20% of our population? That's what we're aiming for.

You'll have lots of questions. I think that's where we can address things better.

[The Chair, Conservative, Phil McColeman]

We thank you for your presentation.

We'll now move on to questions from members.

We'll begin our five-minute round with Madam Sims.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you, Chair.

I want to thank all of the presenters for coming and giving us your perspective and sharing your story with us.

My first question is for Carole Gagnon.

First of all, Carole, I'll thank you for being with us today, as I have everybody else.

On March 12, Margot Young from the Canadian Union of Public Employees came before this committee; you might know her. She expressed significant reservations about social finance. I'm going to quote from her and then ask you to comment:

We are also very critical of the companies that are promoting it. The fact that financialization of public human services will make matters worse on the ground results in people making money on public programs that are supposed to be helping the most disadvantaged in society.

We find that the worst part of the social finance initiative is what is called the social impact bond.

She said that this allows the government to delay paying for needed social services until sometime in the future, and continued that:

It's a kind of cynical marriage of financial investor opportunism and governments that want to push the costs of the current year off the books.

Social impact bonds leverage private sector money to invest in social services with the promise that the government will pay them back in four or five years with a substantial return on their investment. These returns are up to 12%....This tortured logic tries to tie up outdated and debunked notions that the private sector has something to offer in finding more efficient ways of delivering needed services.

I'm really interested in your perspective on Ms. Young's reservations and what you have to say about that.

[Carole Gagnon]

Thank you. I don't know Ms. Young, for the record.

The whole notion that the private sector money is bad money to invest in a social service sector is flawed, to be honest with you, because for years United Way has really relied on private contributions. Annually in Ottawa we invest between $8 million and $12 million. If you look at the history in the last number of years, with all the positive results that we have seen with the programs that we have supported, I would just put that in the centre of the room and say that I do not believe that has been bad money.

When we look at social impact bonds specifically, I think we have to consider that in the financial situation we all find ourselves in, government and funders alike, if there is a way to attract dollars from private citizens or corporations into the social service sector that could liberate some of the dollars that are presently invested by government to be redirected elsewhere, why would be closed to exploring that?

We had submitted a proposal to the Ontario government some time ago specifically around people with disability. I'll just give you some stats. We crunched some numbers. Shortened—

[Jinny Sims, NDP, Newton—North Delta, BC]

I only have five minutes in total.

[Carole Gagnon]

Sorry. We crunched numbers, and we identified that if we targeted just 10% of the number of people who are to begin...gain living wages, it could result in as much as $7 million in saving for the government annually.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

Because of the shortness of time, I'm going to ask people for yes-or-no answers, actually, all three of you.

Do you believe social finance will lead to fewer resources available for social services and a reduced quality of services for the public? Because of the shortness of time, yes or no.

I'll go to Naveed first.

[Naveed Chaudhry]

I don't think so, because we are not—

[Jinny Sims, NDP, Newton—North Delta, BC]

Okay: thank you.

[Carole Gagnon]

No.

[Bill Crawford]

No, but with some reservations.