Delivering More Capital to Communities


Analysis from the perspective of community-based organizations looking for social capital has tended to emphasize the inadequacy of the supply to their demands. In fact, a great volume of capital is looking for blended value returns, or would, with a little encouragement. To bring this plentiful supply and into closer alignment with the plentiful demand necessitates five courses of action.

Community-based organizations need to get beyond their fixation with grant-based funding. More mature or ambitious organizations may find that equity offerings can attract investors who want a market or below-market rate of financial return blended with a social and/or environmental return. Pension funds and other large institutional investors must be shown how social finance is fully compatible with the fulfillment of fiduciary duty - an essential component of any investment strategy. Program-Related Investing will enable foundations to devote more of their endowment capital to mission-related activities. We could also use more complex financial instruments that allow diverse social investors to co-invest and create deals of a scale that would not otherwise be possible.

Finally, we must create dedicated networks of intermediaries to perform due diligence on community initiatives on behalf of investors. To mature, these networks in turn will require subsidies, regulatory reform, and vastly improved systems for tracking the financial and social performance of community initiatives. These investments in the "enabling infrastructure" of the social capital market are probably the most important of all.

A Supply Side Perspective On The Canadian Social Capital Market
Harji, Karim
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