Community Wealth Building
There is a need for capital investment in community-owned nonprofit structures so that these enterprises can continue to create jobs, innovate, scale up social enterprises, deliver essential services in communities, and take advantage of market opportunities.
Amidst growing inequality and household debt levels, coupled with rising social polarization and distrust in government, nonprofits are under increasing strain to meet demands for community services while performing their traditional function of building community cohesion and bridges to the public policy process. In other jurisdictions (and to a limited extent in Ontario), nonprofits are finding ways to address these challenges by engaging people in community ownership of critical services like housing, food, and energy, which helps to keep the wealth generated by communities circulating in the local economy so it can serve local needs instead of being extracted for shareholder profits.
Public benefit nonprofits (charities, cooperatives, and other nonprofits) should be supported to scale up these local economic development initiatives that put community well-being first and provide opportunities and dignity for local residents. To do so, they need access to financing and investment mechanisms so they can amplify what’s already happening in a few communities. However, lenders are reluctant to lend to nonprofits with few assets or uncertain or modest revenue streams and are hesitant about business models they often don’t understand or appreciate. There is a central role for the provincial government to offer or facilitate capital investment, including via the Infrastructure Ontario Loans Program. Eligibility for this program was expanded six years ago to certain parts of the nonprofit sector but it still remains inaccessible to others, including arts and culture groups, employment services, and nonprofit social enterprises.
At the same time, some public and private investors are interested in investing in the nonprofit sector for a social and financial return. It is important that new “social finance” mechanisms primarily support nonprofit social enterprises and do not end up subsidizing private investment. There is a clear need for community-led, nonprofit intermediaries (similar to the $25 million RISQ, Reseau d’Investissement Social du Quebec, and the Quebec sector’s $50 million “patient capital” fund, Fiducie) to link small- and large-scale capital with local and emergent nonprofit enterprises that need investment.
ONN’s vision: Nonprofits have access to new and more accessible investment mechanisms so they can support the growth of community wealth and well-being
With an enabling policy environment, Ontario nonprofits are empowered to leverage their collective assets – like buildings, reserve funds, and investments – to generate community-driven investment in more inclusive, equitable forms of local economic development. Community-driven finance initiatives (such as community bonds) connect individuals who would like to invest their dollars locally with community-led enterprises – such as arenas, food hubs, community kitchens, community-owned co-working spaces, housing, and energy cooperatives. Public benefit nonprofits are categorically eligible for the Infrastructure Ontario Loans Program. The government actively facilitates the vibrancy, diversity, and scaling up of nonprofit social enterprise through business development supports and an enabling regulatory environment.
Steps we’re taking to meet that vision
We’re advocating for the Ontario Government to:
- Expand nonprofit access to provincial capital funding and low-cost loans via the Infrastructure Ontario Loans Program so that all categories of public benefit nonprofits are eligible
- Develop and promote a Community Finance Policy Framework for Ontario to advance locally driven community investment mechanisms (like community bonds) for individuals with savings, nonprofits with assets, and other institutions to channel investments into public benefit nonprofits
We’re working with the Ontario nonprofit sector to:
- Convene the “Community Wealth Building” network to provide a forum for nonprofits and cooperatives to develop a shared understanding of our role in fostering a more inclusive economy
- Update and continue to promote our Policy Blueprint for Strengthening Social Enterprise in the Province of Ontario
- Foster social procurement by governments, nonprofits, and other purchasers, including through Akcelos, the national marketplace for social purchase
- Convene a Community Finance working group and connect nonprofits holding assets with intermediaries in the sector and those looking to test these finance mechanisms to grow the nonprofit and collaborative economy, as part of Toronto Neighbourhood Centres’ Inclusive Economies project
- Develop a better way to measure the impact of social enterprise through the Common Approach initiative