Seed money for social services

Unique Edmonton venture fund offers to invest in vital community work

Gary Lamphier, Edmonton Journal
Published: Saturday, April 09 2011

It’s Friday morning at NAIT, where some 30 “social entrepreneurs” are jammed into a classroom for the start of an intensive three-day boot camp.

Many are passionate 20-somethings with a raw, untried concept, a fuzzy business plan and a burning desire to make the world a better place.

But there’s also a sprinkling of middle-aged folks who currently work for local non-profit agencies, and believe they’re spotted an opportunity to fill a gap in services.

The boot camp is sponsored by the Social Enterprise Fund (SEF), a unique $7-million vehicle formed in 2008 by the Edmonton Community Foundation, the City of Edmonton, the Capital Region United Way and the Alberta Real Estate Foundation.

The SEF’s objective: to issue repayable, interest-bearing term loans to worthy local organizations that are focused on addressing the social, environmental or economic needs of Edmonton residents.

In other words, the fund offers conventional financing -which nonprofit often find virtually impossible to get -to businesses that deliver much-needed services.

Since most traditional social service funding agencies only issue grants, not conventional loans, the SEF’s unique business-oriented approach is being closely followed right across the country.

So far, the SEF has issued 10 loans at an average of $500,000 apiece, or nearly $5 million. All borrowers are current on their payments thus far, notes Bob Ward, the SEF’s affable executive director.

Since most loans are short-term, the funds are constantly being recycled. Right now, about $1.8 million is “out on the street,” Ward says, and another $2 million is ready to be loaned out.

“The loans can be used for affordable housing, reducing poverty, finding transitional employment for youth or urban agriculture, so it’s pretty diverse. The trick is, how do you make (the venture) sustainable?”

The SEF’s clients and would-be borrowers include a wide variety of local organizations, some of which are already active in the socialservices sector. Some examples:

Catalyst Theatre which is looking at building a new LEED facility in Old Strathcona;

The Seniors Association of Greater Edmonton (SAGE) -it’s looking at establishing a new wellness centre based on the social-enterprise model;

Echo Wear -a business that hopes to employ immigrant women and local fashion industry talent to design and manufacture eco fashions;

YOUCAN Edmonton a local agency that hopes to launch a social enterprise to find jobs for at-risk youth.

Central Edmonton Community Land Trust -it’s seeking funding for affordable housing; and

Sustainival it hopes to launch a carnival/festival “crowd sourcing” event to introduce sustainable consumer products to the mainstream.

Randy Thompson, a seasoned entrepreneur with a gift for quick quips and entertaining patter, is leading this weekend’s boot camp at NAIT.

He has run angel investor networks -including the VentureAlberta Forum -for years and knows just how tough it is to raise capital for profit-driven startups, let alone those that have a social mission.

Thompson is here to share his business acumen, his insights into what angel investors look for in a startup, and to help social entrepreneurs hone their pitches for the big battle to come on Sunday afternoon.

That’s when a select few will compete -in a Dragons Den-style confrontation -for four $10,000 cash prizes and 25 hours of free coaching. The latter will be provided by experts from TEC Edmonton and novaNAIT, the school’s enterprise development arm, where Thompson is the entrepreneur-in-residence.

Be forewarned, Thompson tells his eager boot-camp attendees. Social enterprises don’t get any brownie points for moral superiority.

All new ventures face the same financial challenges. And if social entrepreneurs can’t convince investors to back their businesses, they’ll face the same hard road as moneygrubbing entrepreneurs from “the dark side,” as he jokingly calls it.

“So you have no special status with me this weekend, if that’s OK,” Thompson goads the crowd.

“Bring it on,” comes the quick comeback.

Still, I find it hard not to admire the enthusiasm of these boot campers. For most of us, making a living, paying the mortgage and supporting our family consumes all the energy we’ve got.

If there’s a few bucks left over to give to our favourite charities or social causes, we silently congratulate ourselves for our selfless community spirit. But that may not be enough to sustain our vital social services in future.

With governments everywhere facing hefty deficits -the cash-strapped U.S. government was even in danger of shutting down late Friday, when I filed this column -and the concept of traditional volunteerism under growing pressure, social enterprise could be a key part of the solution.

“Social enterprise builds social value, but by definition it has to be a self-sustaining business,” says business consultant Kevin Gangel of Ekos Inc., who also helped organize the boot camp.

“Because we have this unique $7-million fund, and this isn’t happening anywhere else in Canada, as these social enterprises grow the effect (in Edmonton) will be just like it is with traditional businesses,” he argues.

“Successful people who have been employees or senior staff in social enterprises will go out and create spinofforganizations. So you’ll have that same sort of geometric growth you have in the tech sector or the biotech sector or whatever.

“In Edmonton, we’re already farther along the curve, even though it’s still early, than other cities in Canada.”

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