Co-development of a Social Innovation and Social Finance Strategy for Canada

In June 2017 the Government created a Social Innovation and Social Finance Strategy Co-Creation Steering Group (SG) to provide recommendations for a Strategy. Based on a year-long process the SG developed 12 recommendations.
In response, the Government announced the Strategy’s foundational elements in November 2018 including a $50 million Investment and Readiness program to build the capacity of organization to access social finance and a $755 million repayable Social Finance Fund.

Innovation Summary

Innovation Overview

In 2015, the Prime Minister mandated the Minister of Families, Children and Social Development and Minister of Employment, Workforce Development and Labour to jointly oversee the development of a Social Innovation and Social Finance Strategy for Canada. Stakeholders and government had been discussing social innovation and social finance for a decade and this clear public commitment signaled the Government’s intention to advance a social innovation and social finance agenda.
The project’s key innovation is the way in which government and stakeholders worked together. Federal departments, led by Employment and Social Development Canada, and reporting to the two Ministers named above, worked to engage external stakeholders. Key to this engagement was creation of a 16 member Steering Group of sector leaders, selected through a transparent public process, to inform and guide policy development in this rapidly emerging public policy space. The engagement approach encouraged broad consultation with key stakeholder networks, and was supported by an inclusive Steering Group selection process which made efforts to balance linguistic, gender, regional representation and experience along with established networks and to ensure minority and Indigenous voices. In an effort to mirror the diversity found throughout Canada, this inclusive engagement approach generated recommendations for an SI/SF Strategy that reflects the interests and preoccupations of various sectors including charities, non-profit organizations, co-operatives, and private businesses advancing a social or environmental mission. This approach served to guide government in its policy development and ensure that a clear snapshot of the state of Canadian social innovation and social finance emerged.
One federal official from Employment and Social Development Canada served as the Steering Group Co-chair, and officials from many federal departments including Innovation, Science and Economic Development, Public Services and Procurement Canada, Privy Council Office, Finance Canada, Canada Revenue Agency, and Indigenous Services Canada took part in the regular Steering Group working sessions.
The goal was the co-creation of meaningful and inclusive recommendations to guide development of policy which reflects diverse views and builds consensus across a range of diverse sectors and stakeholders who do not traditionally work together.
The ongoing co-creation process strengthened the Steering Group understanding of the inner workings of Government and built trust and understanding among participants in the process. In addition, the process itself forged a powerful and enduring Canada-wide network of allies across sectors most of whom had not previously worked together to advance a future vision of Canada. For example, in the Province of Quebec there is the presence of a mature ‘social economy’ which is an important socioeconomic driver supported by more than 7,000 collectively owned and managed organizations that generate approximately $40 billion in revenue and 215,000 jobs. In the rest of Canada the ecosystem is more nascent and not yet formalized.
Major beneficiaries of a national Social Innovation and Social Finance Strategy will include charities, not-for-profits, social purpose businesses, co-operatives, foundations, social entrepreneurs and researchers working with vulnerable Canadians and who have difficulty getting access to capital to advance innovative approaches to tackle social and environmental problems.
In August 2018, the Government published the Steering Group’s report, Inclusive Innovation: New Ideas and New Partnerships for Stronger Communities, which included its 12 final recommendations for government to guide development of a Social Innovation and Social Finance Strategy for Canada.
The first steps in building a Strategy were announced by the federal government in its Fall Economic Statement (2018) – the intention to establish a $50 million investment for social purpose organizations to build their capacity to access social finance capital and a $755 million repayable Social Finance Fund over 10 years to provide access to capital for social purpose organizations. Budget 2019 reaffirmed these investments and directed $50 million of the Social Finance Fund to an Indigenous Growth Fund, and committed to devoting $100 million towards projects that support greater gender equality. The government direction generated a positive response from across the sectors engaged and Canada was publicly hailed as going from “from laggard to leader” in the social innovation and social finance space.
Going forward the Government has signalled an ongoing commitment to co-creation in the implementation of a Social Innovation and Social Finance Strategy.

Innovation Description

What Makes Your Project Innovative?

The Government advertised widely and held an open call for nominations for SG members, to ensure an open transparent and merit-based process to select 16 external representatives of 189 eligible applicants. Successful applicants were selected from multiple fields.
The effort to have a co-creation process between Government departments and key stakeholders, while more time consuming and more resource intensive, led to better policy advice being prepared for the Government. One federal official served as the SG Co-chair, and officials from many federal departments and agencies took part in the SG working sessions. Officials provided subject-matter expertise and their participation strengthened and demystified the SG's understanding of government policy development and considerations leading to government decisions. Government is now beginning to act on the recommendations; the participation of multiple Government officials throughout the process has increased buy-in across Government.

What is the current status of your innovation?

Currently, the Government of Canada is building an approach to implement a two-year, $50 million grant and contribution program (2019-2021) to partner with organizations in the sector to flow financial support to social purpose organizations (SPOs) to enable them to take part in the social finance market throughout the innovation cycle. Eligible projects include: 1) building technical expertise related to skills such as financial management or tendering and bid writing; 2) impact measurement and knowledge mobilization; 3) emergence and growth of social finance intermediaries; and, 4) early stage innovation.
In addition, the Government committed to implement a $755 million Social Finance Fund in 2020 to provide new, repayable social finance funding to SPOs. The Social Finance Fund will make repayable capital available to newly created and existing funds in the social finance market across Canada, as well as attract new private sector investment to build the social finance sector.

Innovation Development

Collaborations & Partnerships

The Steering Group had meetings with government, led more than 60 engagement sessions, two online public consultation processes and engaged over 35 Indigenous organizations. Sessions included charities, non-profit and Indigenous organizations, foundations, co-operatives, social enterprises, unions, umbrella groups and social entrepreneurs.
Each representative brought unique, diverse perspectives which enabled widespread buy-in and ownership of the development of the Strategy recommendations.

Users, Stakeholders & Beneficiaries

Civil society organizations engaged in ongoing discussion with SG members and government to strengthen and broaden a very diverse network of social purpose organizations.
While government gained a more informed and nuanced understanding of the entire social innovation and social finance ecosystem, the bottom up, co-development exercise to create national policy recommendations, in partnership with external leaders, also ensured more ownership and buy-in by the sector to the co-creation process.

Innovation Reflections

Results, Outcomes & Impacts

In August 2018, the Government of Canada published the Steering Group findings in a report, Inclusive Innovation: New Ideas and New Partnerships for Stronger Communities, which included 12 recommendations for Government to guide development of a Social Innovation and Social Finance (SI/SF) Strategy for Canada.
In its November 21, 2018 Fall Economic Statement (FES), the Government of Canada announced its intention to begin to build the SI/SF Strategy. Responding directly to Steering Group Recommendation #6 to “create a Social Finance Fund to accelerate the development of social finance ecosystems across Canada,” the Government proposed to make available up to $755 million on a cash basis over the next 10 years to establish a Social Finance Fund.
Additionally, the Government proposed to invest $50 million over two years in an Investment and Readiness stream, for social purpose organizations to improve their ability to successfully participate in the social finance market.

Challenges and Failures

More effort to engage in team-building at the outset would have assisted the diverse SG to work well together and build trust to have difficult conversations respectfully.
Multiple streams of work placed increasing demands on SG members’ time over the course of the process, leading to the unequal participation of members in some areas.
Due to cost constraints, five of six in-person meetings were held in Ottawa/Gatineau with only one held outside of the National Capital Region, causing a missed opportunity to have meetings across Canada, underscoring the country’s vast geography and diverse communities.
Some Indigenous political groups said that they were not adequately engaged in the development of the recommendations, despite there being engagement with 35 Indigenous groups and two Indigenous members on the SG.
Going forward, there may be varied understandings around the scope of co-creation; namely, between the co-creation of the recommendations or the co-creation of Strategy.

Conditions for Success

Steering Group members had to demonstrate leadership to agree upon and endorse 12 Steering Group recommendations to government, some of which were not completely in line with the advice of their networks.
Public servants had to demonstrate leadership by adopting policy advice prepared outside of traditional Government policy circles.
The motivation and commitment of Steering Group members was key. The Steering Group members were selected from a public call for nominations in which individuals had to put their own name forward for consideration, thus favouring selection of highly committed individuals. While travel was paid, there was no remuneration for the Steering Group.
The Government needed to demonstrate its political commitment to the co-creation process and its outcomes.

Replication

The co-creation process was the key innovation in development of advice to the Government of Canada. To date, a process of this magnitude has not been replicated.

Lessons Learned

A lead-in period for the Steering Group is recommended which allows for integration of a well-designed team-building component to enhance the quality of the group process.
There is a need to provide support, including financial support for vulnerable groups to participate in the process. A per diem support to individuals from vulnerable groups to participate would have ensured additional voices were heard in the recommendations development process. Poverty should not be a barrier to participate in engagement.
Ministers need to be engaged as early as possible in the process to ensure ongoing political support for the process and to reduce risk of undue delays.
Engagement with Indigenous leaders was challenging under a community-level Steering Group process, as there was an expectation of a government-to-government dialogue.
Finally, it is recognized that in such a process, greater clarity may be helpful around the specific object of co-creation, namely whether the Steering Group was enacted to provide advice, or whether to co-create the policy per se.

Anything Else?

Member biographies
https://www.canada.ca/en/employment-social-development/programs/social-innovation-social-finance/steering-group/member-biographies.html

Case studies prepared to build concrete examples of social innovation and social finance now operating across Canada.
https://www.impactinvestmentforum.com/research-and-resources/sisf-case-studies

Non-government network and website established post-Steering Group mandate to target Government support and action to build a social innovation and social finance strategy
https://sisfs.ca/