This document outlines recommendations for achieving sustained economic recovery in Canada through the development and resourcing of for-profit social ventures. Outlined herein are models from the US and UK with proven results, cases studies of Canadian for-profit social businesses that are contributing to the Canadian economy through job creation and investment management, and an outline of what a social venture business development plan could look like.
Three high level recommendations:
What is a social venture, social enterprise and community enterprise?
Social enterprises have always been part of the Canadian economic fabric. Until recently, however, the notion of making money and doing good as a stand-alone corporate entity was not part of the business lexicon. Over the past few decades major world powers have seen the value of creating incentives and structures for businesses that put community and social issues at the core of their operations. These companies are different from charities, as they still have the drive to make a profit and provide a return to their investors.
For-Profit Social Venture: “For-profit social ventures are legally incorporated for-profit entities explicitly designed to serve a social purpose. While their primary goal is social impact, their forprofit structure requires paying attention to a “double bottom line” - dual social and financial objectives that guide managerial decision-making and determine success.”
Social Enterprise: This is a business run through a charitable entity. An example of this could be a thrift store like what the Salvation Army operates. The profits from these businesses go back into the charitable purposes of the organization to further their program and service delivery.
Community Enterprise: “Organizations or ventures that achieve their primary social or environmental missions using business methods by applying market-based strategies to today’s social problems. The name Community Enterprise may better capture the essence of this type of venture as part of the middle ground between the state and the market.”
Currently in Canada there is no consistent provincial or any federal legislation delineating this type of business. In order for our country to compete on a global scale with new innovations in healthcare, manufacturing, agriculture, financial services, retail, energy, etc. we need to start looking at ways that the social ventures can be promoted, supported and encouraged.
There is a general consensus of common practices that these types of business share.
Models from the US, UK and Canada :
United States - B-Corporations and Low-Profit Limited Liability Company (L3C)
President Obama stated, “This is an "all-hands-on-deck" moment and that government cannot solve our nation’s problems alone… It is critical to partner with citizens, nonprofits, social entrepreneurs, foundations and corporations to make progress on our nation’s great challenges. [We need to] find new solutions to old problems, and this is where the social innovation can play a unique role.”
Beneficial Corporations (B-Corp)
B-Corps are not legislated entities, but rather, companies that have undergone a certification process by the B-Lab, an independent organization based in the United States. This certification is used by consumers and investors to identify companies that are socially and environmentally responsible. Even though the B-Lab operates out of the US, Canadian companies can apply for this certification. As outlined on the B-Lab website, there are three things that these types of companies try to achieve:
Unlike B-Corps, L3C’s are a legal structure based on the LLC model. This is type of business is regulated state-by-state and typically focuses on managing investor risks for those companies that generate between a 1-5% ROI. Unique to this model is the opportunity of private foundations to invest in these, seemingly higher-risk companies, as part of the foundations disbursement quota even though they will also be generating an ROI back into the charitable foundation. This investment platform serves two purposes:
1. Allows start-up for-profit social ventures to work closely with charities as an investee, but also as a potential supplier to other charities; and
2. It generates a return back into the foundation that not only reflects on the social drivers of the foundation, but also on the financial drivers of assets under management. The net result is new dollars entering into the market place, growing out a viable economy while still supporting the much needed charitable sector.
UK - CIC’s
“This is not about handouts - it is about encouraging a new, self-sustaining market to grow, free of state interference. We want more social investment opportunities to be available to citizens and the managers of our savings. In the same way that Finance flowing to business start-ups is the lifeblood of our economy, so it will be with social enterprises. Change in this market will not take place overnight, but it will be transformative in allowing social ventures to scale-up and take on new challenges. We will do all we can to make it happen.” This statement is from MP Nick Hurd and the Rt. Hon. Francis Maude MP in a cover letter outlining the UK investment strategy from growing the social market.
Community Investment Companies operate in the space where government and for-profit businesses do not, cannot or are unable to for various reasons. They might be what we call a 3P partnership, but they are specific to a community’s social issue.
What’s Happening in Canada?
Things are not looking great… we are lagging behind major world powers that have made a conscious choice to invest in businesses that are driving economic growth through social change. There are however pockets of individuals, companies and organizations that pushing the social venture agenda at a grassroots level.
For all of these organizations to really see meaningful change, there needs to be some policy development at the government level. At a provincial level there are some policy changes occurring:
Three examples of entities that are actively investing in social ventures.
The UK has the most comprehensive research on the social enterprise marketplace. Below are just some stats highlighting where this sector is headed.
Seven recommendations have been developed to bring Canada on par with international standards.
About the Author
Gena Rotstein is the CEO of Dexterity Ventures Inc. a for-profit social venture she launched in January 2008. She is also the founder of Canada’s first philanthropic brokerage firm - Dexterity Consulting and the SEDAR of charities - Place2Give.com. Holding an MA in non-profit management and Jewish Communal Service, she has over 15 years of experience in the charitable sector. Her work has been published in major international publications as well as been sought out for news networks.
BERR (2007) Annual Small Business Survey 2006/07. London: BERR, available at:
Bridge and Corriveau, “Legislative Innovations and Social Enterprise: Structural Lessons for Canada” Feb. 2009
Bromberger, Allen, “The New Type of Hybrid,” Stanford Social Innovation Review, Spring 2011
Edwards, Michael, “Philanthrocapitalism - ‘Oil and Water or the Perfect Margarita?’ Where is the ‘Social’ in ‘the social economy?’” The Philanthropist, 2009, volume 22, 2
Ellison & Hall, “Strength, Size, Scope: A Survey of Social Enterprises in Alberta and British Columbia” BC-Alberta Social Economy Research Alliance (BALTA), 2010
Pearce, “Social Enterprise in Any Town,” Calouste Gulbenkian Foundation, UK; 2003.
Reis, Tom “Unleashing Entrepreneurship for the Common Good,” W.K. Kellogg Foundation, 1999. The MaRS Institute - “Social Entrepreneurship Series: Legislative Innovations”, February 2010.
 Centre for the Advancement of Social Entrepreneurship
 Bridge and Corriveau, “Legislative Innovations and Social Enterprise: Structural Lessons for Canada” Feb. 2009;
The MaRS institute did a comprehensive study on the role of B-Corps and L3C’s in their white paper - “Social Entrepreneurship Series: Legislative Innovations”, February 2010.
http://www.granvilleonline.ca/sustainability/vancouver-social-venture-network-gathering © Dexterity Ventures 2011
 Original stat based on UK numbers from 2007; informal review of Canadian businesses is trending the same
 http://isis.sauder.ubc.ca/files/2010/10/Social-Enterprise-Employment-Report-Web.pdf © Dexterity Ventures 2011