Sure.
Hi. I'm very pleased to be back—or pleased to be here in person. Last time I appeared before the committee, I think it was a time of year I wouldn't have wanted to be here, but on a day like today it's lovely. Thank you for having me.
To be clear, I'm the vice-president of community investment at Vancity. I'll give you a little bit on Vancity. We're a $19-billion financial institution. We're a co-op, member-owned. We have a business model that's unique and I think worth spending just a second on, because it's where our interest in Resilient and having a VP of community investment comes from. It's not always the most common thing in a large, or fairly large, financial institution.
Essentially, Vancity grew out of an experience where capital wasn't reaching markets that it needed to. There were members, people living in Vancouver, who couldn't get capital. Without going into the origin story, which even I am getting tired of, it is really the foundation of the credit union; it hasn't been lost. Central to the way they look at their business is that the best business really is finding markets where capital hasn't been going. It's not avoiding those markets but actually identifying them and moving into them in a thoughtful, managed, and evaluative way.
That's my job. I'm in charge of business development for Vancity in terms of community investment. Our overall big, hairy, audacious goal is to have as much as possible of the $19 billion of our members' money invested into capital-restrained areas of the economy, capital-restrained communities, places where the investment will really make a difference in terms of how the people in British Columbia live and how people in the communities of our members live and survive.
Resilient is just one example of that, and I think it's an interesting one. It also leads into I think some national issues around the development of the sector. You can call it social finance or you can call it community investment, but it's an increasingly important sector, I think. As governments have re-evaluated their roles, have tried to get more thoughtful about what those roles should be, and have been under, to be honest, economic constraint in terms of investment, it becomes I think more important to be mindful of how to build capacity in communities to move capital in effective ways. Resilient is one small example of that.
Resilient is one of a number of funds across Canada—there aren't very many, probably eight or 10—that are attempting to provide capital to social enterprises, non-profits, businesses that are working to improve the environment. They could be for-profits as long as they have a mission base to them. It's where private capital hasn't gone, where they can't generally get bank financing. This is sometimes referred to as impact investing, social finance, community investment—you hear all those terms. In Canada it's about a $500-million market, probably a little under that. In the western economic world, it's about $50 billion and growing considerably. I was just in Chicago last year, and the opportunity is really quite amazing.
At any rate, with Resilient we started from a couple of assumptions. We wanted to have a risk-adjusted return. Essentially, we were not asking for the investors to make any charitable donation. This was not based on a charitable outcome. We were having people actually invest in Vancity by buying a term deposit, a five- to seven-year term deposit, and getting a return on that term deposit that was consistent with what the market would give for a fully insured product.
The next issue is how do you make sure that if we by chance...? Our regulators might think we're doing less conventional lending; therefore, it's riskier. In other words, we're lending to these social enterprises or for-profit start-ups that generally can't find capital. Well, I might argue about the risk, but we did set up, in deference to that, a loan loss provision. In broad terms, it was about a $15-million fund. We had about 20% of that fund available as cash from donations to securitize it. Half the donation came from Vancity and the other half came from the Vancouver Foundation. Basically it was a de-risk strategy.
In other words, because we're first actors in this and we wanted to show that there wouldn't be high losses, but we didn't really want to put the burden on the provincial insurance company that insures Vancity, we set up this loan loss, the belts and suspenders to protect the Province of B.C. and protect our members.
With those two things we went out and raised money. We raised, as I said, about $15 million. Let me give you a quick summary of who invested, because it is important. These are the first actors in this sector.
We had 23 investors. We did not try to go retail. This was not aimed at average members. We were really trying to increase the familiarity and comfort of institutions with this kind of investment. There were seven foundations, two unions, two universities, two private companies, three non-profits, and seven high net-worth individuals that participated.
Essentially, the goals of Resilient were to provide this capital pool to help some of these B.C.-based non-profits and companies do their work. The other thing was to educate capital that was coming in about how it could be done in a way that was risk appropriate. In other words, you could get a return that was appropriate with the level of risk you were taking, and you could watch your capital activate important things in the community, watch it bring change.
The actual investees.... So far, of the approximately $12.5 million we want to put out, we've put out about $10 million in the last three years. It could all be out. We're actually being a little slow and thoughtful because in some ways we're trying to develop a portfolio that is more broadly representative of the sector, so it's a mixture of equities, a mixture of non-profits, a mixture of energy company start-ups. It's a risk mixture that's appropriate too.
We fully anticipate and hope we have a loss of around 5% to 10% because we wanted to be on the edge there. That's why we set up the loan loss. So far the loss has been under 2%, but it has been very thoughtful and intentional in terms of how we've gone about it.
So we have invested money in 23 groups, ranging from as disreputable a group as Corporate Knights in Toronto—I'm teasing, but this is a national fund. We've done a couple of things outside of B.C. We took a small equity investment in Corporate Knights. We have Salish Soils, a first nations joint venture, which is on the Sunshine Coast of British Columbia; as well as Tree Island Yogurt, a new organic yogurt producer in the Cowichan Valley of Vancouver Island.
There's broad diversity. There are some non-profits, some charities. We helped a group that works on land preservation bridge finance, essentially, for the acquisition of an important piece of land. They had a good fundraising history, but in general, most banks won't lend on that kind of collateral, on historical experience.
Anyway, it is a real, intentional approach to trying to set up the idea that you can have an effect on your community with a risk-appropriate, non-concessionary investment. As a company, you can go and find the capital you need to grow, because this was aimed at growth capital for certain organizations. Then, we really wanted to educate the investors as to the impact they were having, so we tied in a website and a private log-in for the investor community.