I work for Parkland Institute, a think tank here in Edmonton that's based out of the University of Alberta. We don't receive funding or anything else from the university, and we are a non-partisan group that tries to shed light on public policy issues that emerge in Alberta.
I was really pleased to be invited to speak to the committee today, as we've just finished a report that looks at the relationship between the not-for-profit sector and the Government of Alberta and how that relationship has evolved through time and how it's playing out.
One part of our project dealt with social impact bonds and social financing. It was really wonderful to hear from you that you were looking for someone to speak on this. We'll be publishing that report in June, and we'll be glad to share it with the committee members and anybody interested, which will give a larger context to what's been happening with these sorts of issues in Alberta.
In 2014 Alison Redford brought in legislation that would bring social financing to Alberta by using some moneys from the Heritage Savings Trust Fund as start-up moneys and use $500 million over two years to get these social impact bonds going. I'll give the position I take with regard to these sorts of things.
In the current tax-cutting frenzy among governments of the day, there's a keen interest to find solutions to the underfunding of social problems, especially in commodity-based low tax regimes like Alberta's, where oil prices periodically decline and government revenues can evaporate in an instant. Speculative ventures like social financing and social impact bonds are seen as a potential way out of this morass and to look at how we can fund costly social programs.
The problem that we see is that the social finance that's been introduced to date diverts our attention from spending cuts and gets us into a whole conversation that ultimately is regrettable, in the sense that it leads toward a commodification of social services and focuses us on the intricacies of numbers and not people. One of our main problems is that social financing in this sense is a dead end. It's not an avenue to get us anywhere, and it leads us into conversations like I'm sure you've been having about the possibilities that exist. But at the end of the day, we take our attention away from the proper funding of social programs.
Our report examines how ideas like social financing undermine not-for-profit organizations. Our focus has been on social welfare not-for-profit organizations, ones that deliver front line services to Albertans. We just don't understand how it's possible that these arrangements can benefit not-for-profits. We have to look at the context of how not-for-profits have been affected by the financial downturn in 2008 and how they've been struggling to gain some sort of footing in this new environment in Alberta, following a quite turbulent period, as you all know.
I would argue today that social financing and social impact bonds are not only hard on front line workers and people who use the services, but also hard on policy-makers and politicians who have to be the face of these arrangements, which are cumbersome, expensive, require a lot of upfront capital, and whose results are speculative at best. I've read a lot of the literature, and even the most glowing literature will show you that the results just aren't there. We do not have the literature in place to move forward with anything like this.
Look at the case of Alberta and why it has shelved this sort of project. Alison Redford was the biggest proponent of social financing and she talked about it in her leadership bid in 2011. Even right toward the end of her tenure in 2014, she introduced a bill that fell on deaf ears. As we know from the Big Society project in the United Kingdom, these are hard concepts to communicate to people, to give them a sense of what we're doing and how this is important and how this strengthens our society, as opposed to pulling away from it and making it weaker.
The amount of speculation that we see regarding social finance, even from advocates—there's a huge critical literature on the topic—shows that, basically, future governments are responsible for helping the vulnerable no matter how we cut it, no matter how we look at it. I think that should be our focus in social policy. How can we support and help the vulnerable? How can we support and help these grassroots organizations across Alberta that have been built since the 1960s and the Social Credit government? These non-profits need to be built up and supported and given generous funding, because, at the end of the day, they're actually preventing social problems in local communities. We should be seeking to strengthen our public services and our public sector, not undermining them by turning our attention away into this sort of speculative, what you could call maybe, venture capital in relation to social problems.
There may be some areas in which social impact bonds and social financing works, but I'm saying in terms of social welfare organizations, we're turning our attention away from the sorts of areas that need our focus, and those areas have to do with how we are delivering our social programs, how we are supporting our not-for-profits, and whether we are adequately funding these organizations through time.
In our report, we traced the geneology of this movement towards offloading of government responsibility onto not-for-profit groups, and how this has become an obsession and a fascination in a sense that it shouldn't be. Really, for what it is, it's actually a form of privatization. Unfortunately, the responsibilities for a lot of these problems and a lot of these speculative ventures fall not into government's hands—or maybe they do—and not into private hands, but onto the not-for-profits themselves.
Social impact bonds are built around partnerships, but these are partnerships that are formed for all the wrong reasons. In the case of social welfare, this is the profit on social problems and democratic grassroots organizations such as non-profits. So while the promise of new money for social services is certainly inviting, we have a responsibility to be aware of the potential costs that these ventures could have as they undermine grassroots organizations in small communities, in places like Rimbey, Alberta, for example. We need to really look at that.
There exists a precarious balance between government funding, charitable donations, and the not-for-profit sector in Canada, in Alberta. Social finance threatens to undermine that balance by imposing altogether new responsibilities on non-profits and governments alike. Ironically, the result of these efforts in Alberta, as elsewhere, may be long-term damages, not only to the not-for-profit sector but to its clientele and to government and society at large.
Let's remember for a moment the list of generally accepted benefits that the non-profit sector brings in providing social services: first, there is an efficient use of voluntary labour; second, there are flexible and rapid responses to specific local needs; third, not-for-profits are less bureaucratic; and fourth, Albertans have a lot of respect for not-for-profit organizations in their communities. The more non-profits are asked to take on larger, more complex tasks, the less these same tasks can be met through the often part-time or volunteer labour. There needs to be more and better trained professional staff to take on these new arrangements. They cannot be attained through the traditional sources of charitable giving, and must instead be obtained from government or somehow through the social impact bond model. But since this new financing model is based on markets and competition, which are not areas the not-for-profit sector is accustomed to dealing with, non-profit agencies find themselves having to hire or contract professional staff whose tasks include writing grant applications.