Vancouver Social Enterprise Forum: Was it 2004? Really?

With the close of the first quarter it's a good time to ask ...

How do you feel about the state of Social Enterprise in Canada?

Pretty good? How about compared to the heady days of the 2004 Federal Budget? Remember that?

Canadian PM announces big $$$ for Social Economy

In his opening speech to Parliament, Prime Minister, Paul Martin announced that social enterprises would be assisted by a fund of CAD$152 million (over 5 years), and in a move reminiscent of the recent UK initiative, they would have access to the government’s small business programs.

Responsibility for the social economy initiative (along with community development) will reside in a new Ministry of Human Resources and Skills Development – indicating clearly that the government sees it as an employment generating initiative. By contrast, the rest of the voluntary sector initiative is in the Ministry of Social Development that is responsible for income support and other social services.

In his speech, Martin gave an indication of the source of the social economy initiative. He admitted that since the beginning of his political career he had been involved in RE SO, an interesting collaborative venture between unions, businesses, and community groups in a large rundown area of southwest Montreal. RESO is often used as an example of successful neighbourhood regeneration, but in this case, the product is self-help enterprise rather than government.

Other interesting initiatives announced in the Canadian 2004 budget included:
A commitment to a new not-for-profit corporations act, designed to reduce the regulatory burden on the nonprofit sector and improve financial accountability
Acceptance of most of the recommendations on the tax treatment of charities made by the Joint Regulatory Table (between the government and the voluntary sector), established as part of the Canadian government/voluntary sector ACCORD
A government investigation into the feasibility of establishing a bank for the charitable sector.

[Thanks to Accord for the reminder.]

And there was Eleni Bakopanos' speech at New Century, New Risks: Challenges for Social Development in Canada

The Social Economy

... However, I do believe that the social economy is an area that the federal government did not pay enough attention to in the past. It is only in the past two years that the social economy has gone from a situation where few people in the federal government had even heard of the social economy, to the February 2004 Speech from the Throne which recognized the vital role of this sector to Canada’s social foundations.

Social economy enterprises operate like businesses to produce goods and services that generate revenues, but they manage their operations on a not-for profit basis by reinvesting all revenues to achieve a social purpose rather than to generate a profit. They play an important role in promoting local and regional development, and set as their goal the integration or protection of their members and employees, including those most disadvantaged, without discriminating in any way.

The functioning of social enterprises is closely linked to the concept of social responsibility. In fact, the social economy reflects what many are now referring to as the ethical economy—corporate citizenship and activities that promote economic and social well-being, inclusion and justice.

This approach is not new, and it is all around us. It may be the day care centre, the housing co-op, a senior support service, or a local community economic development organization. Overall, Canada has about 10,000 enterprises and organizations that employ about 100,000 people and that have sales of about $20 billion ($2 million in average sales).

It is but one dimension of a broader community movement in Canada. The movement is being revitalized by innovative practices that are founded on citizen-led, community-based processes that create local partnerships and solutions.

And, communities and social entrepreneurs have a remarkable track record of success. To be more specific, I would like to give you one example from my own riding, in Ahuntsic. There is a wonderful organization called AMRAC. It grew out of a community plan to revitalize the local neighbourhood and create employment opportunities. AMRAC refurbishes furniture and builds new furniture. It employs and trains people who are having difficulties finding work. The organization has two storefronts––one for the furniture it sells to the general public, and another store that provides household items at prices that are affordable to individuals and families with low incomes. The revenues generated are reinvested into training programs and equipment.

IAM CARES is another example. It stands for the International Association of Machinists’ Centre for Administering Rehabilitation and Employment Services. IAM CARES offers services to those with physical and sensory disabilities to help them find jobs. Its mandate is to take on 400 clients per year and place about half in jobs. They usually surpass that number.

To help fulfill the potential of the social economy, we have been asking stakeholders what they see as the barriers holding back the growth of social enterprise in Canada. Five key barriers keep coming up in these discussions. The first is a lack of recognition. This relates partly to public awareness. Expanded political recognition can play a part in shifting attitudes and helping to establish a climate that properly honours social and community-owned businesses for the crucial role they play. There are also issues about how social enterprises are recognized under the law, particularly in relation to tax status.

Another issue is the need for a level playing field so that social enterprises can have access to the business development supports that governments currently make available to private business. Related to this is a need for access to loans, as well as long-term patient capital and a view that the financing needs of social enterprises are not being adequately met by private banks and lending institutions.

Another very important barrier, at least in some communities, is the lack of prior community-based planning exercises that are required to generate new social enterprises and underpin their growth. In particular, this relates to the need to build capacity among the various economic development organizations in the community that help to drive community partnerships.

Organizational and human capacity issues are also a challenge. Social enterprises, and the networks and organizations that support them, require skilled employees, managers and board members. And finally, there is a lack of research and knowledge. We must demonstrate when and why social economy approaches are successful, and identify and share the strategies that work best. Building this evidence is essential for two reasons: first, because it will help build credibility and shift public attitudes about the social economy, and second, because it will help those involved in the social economy to continually improve and become stronger.

I can imagine you now want to know: “What is the role of the federal government in the social economy?” Let me assure you that the social economy has emerged as a significant new priority for the Government of Canada. The February 2004 Speech from the Throne acknowledged the promising and vital contribution of social entrepreneurship in community development. The March 2004 Budget announced up to $132 million in new spending and firmly put the social economy on the Government’s agenda for helping communities. ...