Human Resources Committee on March 31st, 2015

[The Chair, Conservative, Phil McColeman]

Good afternoon, ladies and gentlemen, and welcome.

This is meeting 50 of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. We are here to continue our study exploring the potential of social finance in Canada.

Joining us for our first hour, we have from the National Association of Friendship Centres, Mr. Jeffrey Cyr, the executive director. Welcome back to the committee, Mr. Cyr. With Mr. Cyr is Mr. Yancy Craig.

Joining us from the Canadian Parks and Wilderness Society, we have Mr. Éric Hébert-Daly, the national executive director.

Joining us by way of video conference from Vancouver, we have Mr. Evan Saugstad, the chair of the Northern Development Initiative Trust. Welcome, sir.

As you know, each of your organizations has up to 10 minutes for a presentation. I'll give you a signal when you have one minute left as you extend towards the 10 minutes, and then we'll move on to questioning.

Why don't we start with the National Association of Friendship Centres.

Mr. Cyr.

[Jeffrey Cyr, Executive Director, National Association of Friendship Centres]

Mr. Chair and distinguished members of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, it's always an honour and a privilege to be here and to appear before you. Thank you for the opportunity to share with you on exploring the potential of social finance in Canada.

I wish to acknowledge the Algonquin Nation upon whose traditional territory we're meeting today.

As you know, my name is Jeffrey Cyr. I'm a Métis from Manitoba and I'm the executive director of the National Association of Friendship Centres.

Let's jump into social finance, which I see as part of a suite of mechanisms and structures required to facilitate social innovation. Of course social innovation is, at heart, about catalyzing and creating systems change.

For us, one thing is clear. The complexity of the problems around us, most acutely in the lives of urban indigenous people in this country, will not be solved by traditional ways of acting. The systems of today, frankly, are not built to handle the problems of today. As such, I'd like to share a few things with you.

First, I'll give you a very brief overview, because I know you're familiar with the friendship centre movement in Canada and the urban aboriginal population. Second, I'd like to share with you some examples of social innovation and social finance initiatives from across the friendship centre movement. Finally, I'd like to share my perspectives on how the Government of Canada can support social innovation and social finance opportunities for aboriginal people living in urban environments in Canada. Of course, time permitting, I'll do my best to answer any questions.

Let's begin with some facts. As we know, 75% of Canada's aboriginal people live off reserve. Nearly 60% of those live in urban areas. In some provinces, such as Ontario, it's the better part of 84%. Further, the aboriginal population is growing at a faster rate than that of any other population in Canada. This means there are approximately 840,000 aboriginal people living in cities.

The Canadian aboriginal population is young, with approximately 50% under the age of 24. This presents a tremendous opportunity for Canada's future social, cultural, and economic development. However, as you have heard from previous presentations, which I've taken the time to read through, some aboriginal youth live in challenging social and economic circumstances. Ensuring that aboriginal youth have a brighter, healthier, and more productive future requires creative solutions. This committee has heard about the reach, scope, depth, and strength of the friendship centre network in previous presentations. Today I'd like to share with you how this network can be leveraged to ensure that partnership-driven social finance and social enterprise initiatives lead to real and meaningful improvements for urban aboriginal people.

In partnership with the Government of Canada, the National Association of Friendship Centres is now administering the delivery of $43 million in programs and services under the realigned urban aboriginal strategy. This funding has assisted friendship centres and other urban aboriginal service delivery organizations to not only increase services but also, and most importantly, build and expand partnerships. With a range of partners, including all levels of government, the non-profit organizations, the private sector, and the charitable and philanthropic sectors are mobilizing to support aboriginal people living in urban centres to participate more fully in Canada's economy.

Something happened in the transition of this program to friendship centres last year, and it came in the care and design of that program: innovations and partnerships have flourished. Through our very pointed structuring of the urban partnerships portion of this program, we have empowered and prioritized social innovation and social enterprise as targeted funding streams. This may be a first in Canada. This is definitely a beacon in federal aboriginal programming.

Social innovation and social finance represent tremendous tools with which to build on these strategic relationships to develop new or, just as importantly, to scale up and scale out existing initiatives so they can have broader impact. The national association, our provincial and territorial associations, and down to community-level individual centres are increasingly engaged in shaping the social innovation and social finance landscape in Canada.

I want to share a few examples with you. In British Columbia, the BC Association of Aboriginal Friendship Centres has undertaken a number of initiatives to move social innovation and social finance forward. My colleague Paul Lacerte, from the B.C. association, has spoken extensively about the opportunities offered by social innovation and social finance through friendship centres. A number of social enterprises have their roots within friendship centres in British Columbia.

In Quebec, the Regroupement des centres d'amitié autochtones du Quebec has a history of bringing together stakeholders of civil society and the provincial and federal governments to address social and economic issues. The Native Friendship Centre of Montreal created an aboriginal co-op program that promoted artisan skills development and marketing of artwork. The Val d'Or Native Friendship Centre developed co-op housing for first nations families.

Here in Ontario, the Ontario Federation of Indigenous Friendship Centres, OFIFC, has also been working with key stakeholders to develop concrete social enterprise and social financing initiatives, including a program that provided training and development to support friendship centres to build capacity and assist in developing local social enterprise ventures.

Currently, the OFIFC is leveraging procurement opportunities associated with the Pan Am and Parapan Am Games, including the production of 10,000 pairs of moccasins as part of that initiative. This initiative is providing employment to artisans in these communities, as well as providing additional revenue to the labour pool sites in the form of commissions.

The National Association of Friendship Centres in collaboration with the J.W. McConnell Family Foundation, the Circle on Philanthropy and Aboriginal Peoples in Canada, and Canadians For a New Partnership, among many other partners, is working with a wide variety of folks to convene an indigenous innovation summit in Winnipeg in November. The summit is designed to bring practitioners together with those who have resources and with those at the community level to seed social innovation and create learning that all levels can take away from beginner to advanced. In essence, it is designed to build and strengthen the field of social innovation among indigenous peoples, which includes social finance.

Additionally, the NAFC is leading an initiative to be launched—here I'm talking about social innovation—in June entitled Action for Women, which scales up the social innovations created at the regional and community levels, such as the moose hide campaign—we are wearing it here at the table—the “I am a kind man” training program, and a mobile platform designed to address gender-based violence among young indigenous people. Another initiative under this banner will initiate systemic social change in response to the issue of ending violence against aboriginal women and girls. I can tell you that financing this initiative has not been easy under traditional programming guidelines, even with substantive partners and deep proof of concept already in hand.

As I mentioned earlier, aboriginal people constitute one of Canada's youngest increasingly urban and rapidly growing demographics. There is a great appetite for change. There is great energy at this level.

With respect to the role that government can play, throughout your study you have heard from a number of witnesses who have articulated in detail how the Government of Canada can establish legislative, regulatory, and taxation frameworks that will allow innovations to flourish and that will result in the growth of a robust social innovation and social environment in Canada. Most important to us working in this field at the community level is to remove barriers to innovation and social finance by making it worthwhile for social innovators to take risk and build upon their success.

Additionally, much more flexible program parameters need to be established. I return you back to the urban aboriginal strategy, which happened to be in the hands for this time of negotiating of our office, the National Association of Friendship Centres. We managed to do something innovative with it and push boundaries. Much more flexible program parameters need to be established and investments in interventions that are successful encouraged, scaled, and enhanced.

In closing—at a good 9.2 minutes—I would like to reaffirm our commitment to leveraging the power of social innovation and social enterprise to create sustainable opportunities. Through the implementation of the UAS we are beginning to harness creativity, energy, and knowledge that can unlock new ideas and new thinking that will lead to enduring social change and contribute to the full inclusion of aboriginal people in Canada's economic, cultural, and social fabric.

I look forward to addressing any questions that you may have about any specific examples as well.

Thank you.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Now we'll move to Mr. Hébert-Daly.

[Éric Hébert-Daly, National Executive Director, National Office, Canadian Parks and Wilderness Society]

Thank you for pronouncing my name correctly, Mr. Chair.

I'd like to thank members of the standing committee for inviting me to appear as a witness today. It's a pleasure to share the perspectives of CPAWS in these kinds of fora. I should say it's rather unusual for CPAWS to appear before this committee, but nevertheless, we have been involved in two projects, rather innovative projects, in recent months that I'd like to share with you, and that involvement might explain why I'm here today.

Let me start by telling you a little bit about our organization. The Canadian Parks and Wilderness Society, CPAWS, was established just over 50 years ago with the express mission of conserving our public land and our ocean. We also work to ensure that existing protected areas around the country are well managed and meet the highest possible standards, and we work collaboratively with governments, indigenous people, industry, and local communities to find conservation solutions for particular landscapes and seascapes. Our goal is to protect at least half of Canada's public land and water. We're science based and we're solutions focused.

As some of you may know if you have worked in the charitable sector, our charity receives most of its funding from foundations and individual donors. Many of these fund us for particular projects based on their particular interests as donors, so, valuable as their support is, this means that much of our funding ends up being restricted to a particular use. Now, individual contributions that are restricted are very important for our work, but at the same time, the unrestricted donations actually allow us to be agile and to respond to conservation opportunities that might arise suddenly. Unrestricted funds are, however, not as easy to come by as restricted funds

Recently, one of our major donors came to us with a generous offer to fund an endowment. In our initial conversation I reviewed some of the areas of work that CPAWS has had some difficulty funding through traditional charitable foundation sources. Our generous donor agreed to help us with a nationwide strategic opportunities fund and with geographic projects that lie in regions that are difficult to fund, namely, in eastern Canada. In the course of our conversation, I also raised the possibility of turning the endowment into an unusual shape, a real estate asset. As you will see from the documents that have been distributed to you, in our view the business case for such a project is very strong. What's best is that it will provide CPAWS operations with a home base, but more importantly, it will provide a source of revenue for us in the long term. That source of revenue ends up being flexible, and we'll be able to use it to respond to conservation opportunities as they arise. Essentially, our plan is to turn the endowment into a building in a city to help preserve and conserve nature outside the city. This type of social investment using a profit-making enterprise to assist in a non-profit conservation enterprise seems to be resonating with people as we begin to share the concept.

I firmly believe that charities and non-profits should be encouraged to seek profit-making ventures that might assist them in their own long-term missions. However, existing regulations make doing so a little bit burdensome. This committee, I think, is well placed to make recommendations for changes to regulations and legislation that would make this “profit for non-profit” model a little bit easier to establish. In the long run I believe such sources of funding will actually decrease the demand for charitable tax receipts, saving governments much needed tax dollars.

I also want to take a moment to highlight for you another socially innovative investment strategy that fits within your study. This one is actually a park establishment project. It's called Thaidene Nene and it's found at the east arm of Great Slave Lake in the Northwest Territories. It's a park proposal that's located in traditional Dene land and is championed by the local Lutsel K’e, a Dene first nation, who see having a big protected area at the heart of their homeland as a way to conserve not only the land but also their culture, and as a way to develop a conservation economy that will help support their community in the future.

In preparation for what they hope will be an ambitious national park, the local community of Lutsel K’e, which is now faced with 70% unemployment, is seizing this opportunity to create sustained, long-term, local economic development.

Our new national park brings with it a tourism industry. They are working with Parks Canada and the Government of the Northwest Territories to come up with a park management model that will allow them to continue to maintain their cultural practices on the land while providing visitors from Canada and around the world the chance to experience this magnificent northern landscape and their traditional way of life on that landscape.

A key part of the Thaidene Nene park model is based on developing an endowment fund that will support Lutsel K’e’s involvement in providing cultural interpretation services. They are actively fundraising for this fund and have already succeeded in attracting more than $7 million. In fact, they have commitments up to almost $11 million and their goal is to raise $15 million in private funds by the time the park is established. They are also seeking a one-time matching gift from the federal government to make this sustainable over the long term so the trust fund would hold $30 million by the time the park begins operating.

It is really a great model. Sustained traditional cultural expression, sustained economic development, sustained conservation over an important ecologically rich and beautiful landscape, I’d call it a win-win, but honestly that wouldn’t be doing it justice.

When we think of economic diversification in Canada, these models are innovative and forward-thinking. They make social and financial sense. I encourage this committee to see the immense possibilities that come with this style of social investment. They break open new possibilities that certainly get me excited. I hope they will nourish your discussion and study of this topic.

Thank you again for the opportunity to address the committee on this matter.

I’ll be happy to take any questions when the time comes.

[The Chair, Conservative, Phil McColeman]

Thank you for your presentation.

We'll now move to Mr. Saugstad by video conference

Sir, please proceed.

[Evan Saugstad, Chair, Northern Development Initiative Trust]

I will reference my slides as in the report I presented.

Thank you for the invitation. I'm Evan Saugstad, board chair of the Northern Development Initiative Trust, headquartered in Prince George, B.C. Although I live in northern B.C., I'm joining you today from Vancouver.

Slide 2. Ten years ago the Government of B.C., led by Premier Campbell, sold BC Rail to CN Rail and returned some of those profits to the people of central and northern B.C. by creating the Northern Development Initiative Trust through an act of the legislature and endowed it with $185 million from that sale. We'll also refer to Northern Development in this presentation as the trust.

Slide 3. Although we are a creation of the provincial government, we are independent from government itself and make our own decisions, subject to meeting the requirements of the act. We are responsible for both the disbursement of our funds and the investments of our capital base. The act has allowed us to do what we wished with our endowment. Although we don't have the option of operating as a spend-down trust and dissolving the trust when the funds are depleted or choose to operate in a sustainable fashion, we have chosen to operate in perpetuity.

Today, after delivering 10 years' worth of grants and loans, we have committed and delivered over $125 million to our customers, and have seen our capital base grow to $250 million through prudent investing that's averaged close to 7% annually over the past decade.

Slide 4. Our board is a mix of five provincial government appointees and eight representatives in the trust area selected from local governments. Four advisory boards consisting of all local governments from our four trust regions are an integral part of the process in determining how and where we should spend our allocator funds. In addition to our own funds and programs, both the federal and provincial governments have selected the trust as a delivery mechanism for some of their programs.

Of interest, in 2009, the federal government entrusted Northern Development to adjudicate and deliver $30 million in community adjustment funds, loans, and grants. Of these funds, $20 million were loaned to a number of B.C. businesses to create jobs during the economic downturn and $10 million were granted to job-creating not-for-profit projects. The staff and board accepted and adjudicated over 500 applications for contracts with successful recipients within two months and all the $20 million in loans will be paid back by business to the federal government by the trust by the end of this year. This was completed at a 1% overhead in comparison to Western Economic Diversification, delivering about the same amount of funds in southern B.C. over 18 months, and at a much higher administrative overhead.

Slide 5. The purpose of the trust is to grow the economy of northern B.C. We can provide funds as either direct grants or as low-interest loans. Although we are responsible to the people of northern B.C. on how we disburse our funds, we have created programs that allow private business to access some of our programs to expand the supply chain in central and northern B.C.

Slide 6. The majority of our programs require the project proponents to leverage funds from other sources and for every dollar from the trust, over $8 is invested by other funders.

Slide 7. Leveraging has been a very successful part of ensuring the economy of northern B.C. grows and it has allowed many of our proponents to use our funds to kick-start their projects and bring other funders on side.

Slide 8. Much of this leverage comes from the federal government and their many programs, including partnering on improvements to many rural airports. The federal government, through their RInC program and the trust, have also invested in many recreational facilities. Another common investment was in projects that benefited from the federal community adjustment fund as referenced in 2009.

Slide 9. Part of our success has been the training and funding of grant writers throughout our trust region. Many of our small and rural communities used to struggle with how they could access the many federal, provincial, and private funding sources that currently exist.

Through training and the provision of funds, we have trained hundreds of individuals who have been successful in accessing close to $100 million in grants for their communities. This also includes many B.C. first nations peoples. The majority of our local governments and many bands access annual funds and hire a grant writer for their community.

Slide 10. These are some of our current programs which are all accessible and listed on the trust website. Based on community input, programs can be added or dropped depending upon uptake or the current economic conditions. Changes are based on the input and advice of our regional advisory committees and staff and require the approval of the board.

Slide 11 just lists some more of their current programs.

Slide 12. This is an example of a program that was funded through the federal government's community adjustment fund and delivered by the trust. Of note, this project could have been funded solely by the trust if the federal funds were not available. This business continues to operate today, and although it may seem very small and insignificant on the Canadian scale, it plays a big part in a very small community, New Hazelton, which is located in an economically depressed part of B.C., the Pacific northwest.

Slide 13. This is another example. In 2009 a private company which operated the local grain elevator in Fort St. John decided it was no longer viable and decided to close it. Local grain farmers, with the help of the trust, put a business plan together, borrowed funds from the trust, bought the elevator, refurbished it, and put it back into operation. The North Pine Farmers Institute, which is now the owner, has been paying back the loan of $874,000 on a grain elevator and rail head, and it continues to operate profitably today. Interestingly enough, private industry has since offered to buy it back, to which the local farmers have so far resisted. In the news today it was announced that the other remaining elevator was beyond repair and would be demolished, so this is now the sole grain elevator in Fort St. John.

Slide 14. Thank you for your time. I can take the questions you might have. If any of you want to hear more or see more, we can certainly entertain you if you would wish to visit us in our office in Prince George, and our CEO and staff would be more than happy to show you around.

Thank you.

[The Chair, Conservative, Phil McColeman]

Thank you for your presentation.

I want to thank all the witnesses for their effective use of their time. All of them were under the 10 minutes allotted.

We move on to our first round of questioning.

Madam Sims.

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

I want to thank Jeffrey, Éric, and, of course, Evan—even though you're not in the room here—for very succinct and passionate, I would say, presentations today.

My first question is for Evan.

Evan, earlier in the month Margot Young from CUPE appeared before this committee. Following her presentation, a good friend of mine, John Malcolmson, whom I've worked with in the past, from CUPE research, in the beautiful province of B.C., of course, sent along a report which the clerk distributed to all committee members.

I think one of the most striking lines in the report is where he writes:

In many cases, the social service providers now considering SIBs [social impact bonds] are the same ones betrayed by more than a decade of funding austerity, bureaucratic immobility and policy neglect.

It does strike me that a major part of the social impact bond appeal is the promise of new governance models that would increase program support.

Does it worry you that a promise of change in this area ultimately points to a market-oriented model? Can you comment on this?

[Evan Saugstad]

I guess one of the things that have set us apart as unique is we have our own funds and we make our own decisions on an annual basis, so we can commit to multi-year funding because we know what we have. We're not reliant on government or anybody else to give us funds. We're simply reliant on our own ability to generate them through our base funding.

I think this type of model, although it's unique in its design for the economic growth in B.C., could also be looked at for delivery of social programs and address, as you mentioned there, whether we have the ability to keep going on some of these things.

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

Thank you very much.

Now I'd like to turn to Jeffrey.

Jeffrey, are you worried about these changes, or the promises of the changes leading us ultimately to a more market-oriented model?

[Jeffrey Cyr]

Am I worried? I don't know that it keeps me up at night.

SIBs, social impact bonds, are an interesting financing tool. They've had a modicum of success in different countries: the Peterborough prison experiment, for one. It has application to certain social problems and not to others.

It's been investigated by the Government of Canada on a pilot basis. They've engaged us and asked us about it. It's not so much that a market mentality or market driver is so much the problem, as what we understand drives the benefit to it.

On one side you have a venture capitalist—credit union, bank, financial institution—willing to take what I would call a very low level of risk in a SIB situation. You have a not-for-profit, usually a not-for-profit organization, that basically ponies up the idea and the hard work and labour behind it, and the government guarantees it. I'm okay with that. I think that can lead to innovative approaches.

The only issue I have is that it doesn't lend itself to complex models because it's all based on the metrics. For example, take recidivism. Recidivism, to me, is inordinately complicated because you don't control the levers to actually gain success in dealing with recidivism.

You could do it on a child and family service model because you know the costing structure exactly. You know what it takes to put a child in care. You know what an intervention would save, and you could figure it out. As I once said famously to a federal deputy minister, “It's not that I don't trust you, but I don't trust you.” I would want to know the metrics too in order to do it.

I have no problem taking risks. One of the things that I think folks should consider in a SIB model, which is only one small slice in the social finance umbrella, is where the return on investment is to the not-for-profit organization, which takes the risk in reputation, energy, and time. If you're going to give 7% back, 10%, whatever the number is, to a financial institution, how about 1% or 2% going to the not-for-profits so they can continue to build in the innovation at the ground level because they have to take the risk?

[The Chair, Conservative, Phil McColeman]

You have about 15 seconds.

[Jeffrey Cyr]

I'll stop there.

I don't lose sleep with the market model.

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

Thank you.

Chair, at this moment I would like to move a motion that the committee invite the Minister of Employment and Social Development to testify for a two-hour televised meeting related to the referral of the main estimates, and that this meeting take place at the latest on May 28, 2015.

[The Chair, Conservative, Phil McColeman]

That interrupts the period for questions because we have a motion on the table.

Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

I move we go in camera to discuss this committee business.

[The Chair, Conservative, Phil McColeman]

That's a dilatory motion, so it's non-debatable.

I'll need to take a vote on that motion and then determine....

Yes, Ms. Sims

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

My intention was not to interrupt the meeting.

I'm quite happy to deal with this in committee when we're dealing with committee business so we can carry on and listen to the witness.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

That's fine.

[The Chair, Conservative, Phil McColeman]

Are both parties willing to withdraw the motions on the table?

[Some hon. members]

Yes.

[The Chair, Conservative, Phil McColeman]

Then we'll carry on with questioning.

Thank you for doing that.

Mr. Armstrong, for five minutes.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

I want to thank all of our witnesses for being here today.

I'm going to start with Evan.

Looking at your PowerPoint deck and the Skeena Bakery, which is out in Hazelton, B.C., and I've been there, can you explain how they applied for funding and how that funding is expended? I believe there are people working there who have some significant disabilities.

Can you explain how the money was transferred and how that business was established?

[Evan Saugstad]

Yes.

I will do that to the best of my ability, and if it doesn't quite cut it, we can probably give you a written summary afterwards.

When the feds announced the community adjustment fund and said we have $30 million—$20 million for loans and $10 million for grants—it was advertised, and we had 500 applicants.

The trust has an assessment model. We can feed all of the particulars of every application in and rate them, and then the top-rated ones were put to the board for approval. I think in two meetings we approved all of the top ones, and a couple of extras in case some were declined.

In the case of the Skeena Bakery, a not-for-profit did apply, with the provision that they needed dollars to buy equipment and rent a building, but it was to train handicapped and disabled people on how to run a bakery. In the end when that was approved—I believe the federal government had to do a final sign-off—based on our inputs, that money was transferred directly as a grant to the bakery.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

That one has been profitable and is still up and running. Correct?