United Way of Calgary and Area and Innovate Calgary are on a mission to create an understanding in the local social sector of social finance and its uses. The default for non-profits has been, and continues to be, donor and/or government funding to create solutions to social issues they are working toward solving. We intend to normalize the concept of creating social enterprises to address these issues. We also strive to help organizations develop the skills necessary for start-ups to be successful in their ventures.
What is social finance and how can it help develop your social enterprise?
According to the Government of Canada, “social finance is an approach to mobilizing private capital that delivers a social dividend and an economic return to achieve social and environmental goals. Mobilizing private capital for social good creates opportunities for investors to finance projects that benefit society and for community organizations to access new sources of funds.” 1
In plainer terms, this means addressing social issues while creating economic value by simplifying access to funding for early-stage social enterprises – those enterprises in start-up phase involved in activities such as finalizing products/services, gathering market data, and sourcing funding. The structure of social financial generally involves investors who lend to social finance institutions which pool investment from multiple sources and distribute it among social enterprises. The social enterprises then provide both financial and social returns.
We are seeing a lot of non-profits stepping into creating social enterprises as a means of diversifying and stabilizing their income streams. The challenge here is getting non-profits used to dealing with investors rather than grantors.
UCeed Social Impact Fund
The Social Impact Fund was created in collaboration with United Way of Calgary and Area as lead investment with a donation of $2.5 million, the University of Calgary, and the Government of Alberta’s Creative Partnerships. The fund is managed and administered by Innovate Calgary and an Investment Advisory Group.
UCeed is a family of philanthropic investment funds launched in June of 2020 with a mandate to support research impact, teaching and learning, and community. The Social Impact Fund was created in April 2021 and focuses on generating beneficial social impact alongside a financial sustainability in its venture investments. Like all UCeed funds, any profits received from loan returns or exits are re-invested into the fund to create an “ever green” re-investment into community.
UCeed Social Impact is an investment fund focused on accelerating early stage social innovation. It helps organizations that are just getting their operations off the ground, assembling their team, and validating that someone will pay for their idea. It supports early stage companies to achieve mission critical success towards business growth and sustainability.
But this fund isn’t just about investment. It also offers support in the form of mentorship to provide advice and coaching, monitor milestones, and ensure that proper governance mechanisms are in place to maximize success, bolstered by Innovate Calgary and partners like the Social Impact Lab. The program is designed to create investor-ready companies that are attractive to investment groups.
The ‘Why’ of UCeed
The need for the UCeed Social Impact Fund two-fold; to bridge the gaps in financing for early-stage companies, and in knowledge and expertise, to support local social enterprises in taking their innovations to market.
Social enterprise start-ups often face challenges when seeking pre-seed or seed round funding. UCeed addresses the financing need by helping to take initiative from start-up to a position where there are primed to begin chasing angel or capital investment, providing up to $300K in investment.
UCeed and Innovate Calgary also address the technical gap in knowledge and expertise by exposing these non-profits and start-ups to mentorship, business development programming, and a web of connected local supports.
Investors vs. Grantors
We recently spoke with Jordana Armstrong, Director of Social Innovation at Innovate Calgary, and Fund Manager of UCeed Social Impact Fund, to understand the finer points of social finance. There is a difference in approach between working with investors and working with grantors. “Investors want to see you coming,” says Jordana, “an investor wants to know where you were six months ago and how much traction (or changes toward your goals) you have made in that last six months.”
A granter may want to know that information as well, but with a granter you are often a single point in time focusing on keywords and story, where investors are heavily focused on your business plan. It is important they can see the growth in your organization, that there is a defined team that will be running this program and understand who has accountability for making this happen.
A Tool in your Toolkit, an Ecosystem
“Social finance is a tool in your toolkit.” says Jordana. “It is not for everyone, and it is not for everything, but it can be a useful tool.” Non-profits relying on government and/or donor dollars often comes with demands on mission, how funds are spent, and take up human resources in terms of grant writing and reporting. Creating a source of income based on enterprise as opposed to donation allows organizations to focus more independently on mission. Diversifying revenue streams also creates more sustainability for organizations. These factors allow for a different level of control.
A local example of where this has been useful is Immigrant Services Calgary (ISC). ISC approached Innovate Calgary with a need to invest in business development. Normally, granters would question the use of non-profit funds for business development. UCeed helped ISC bring in a business development specialist to scale up a social program that had become a revenue source for them, which helped them diversify their revenue streams.
It is also important to understand that UCeed is a funding program that compliments a larger ecosystem of local supports for social enterprises that meet regularly through the ABC Social Finance Ecosystem Group – Trico Centre for Entrepreneurship, Calgary Economic Development, and Hunter Centre to name a few. This ecosystem is invested in capacity building in the local landscape around the development of social enterprise. And because this local ecosystem is so connected, there is no wrong point of entry.
Reach Out Now
The time to engage is now, even if you’re only at the stage where you may have a unique idea that will disrupt the current system. Innovate Calgary is very committed to making sure they focus as much on UCeed’s unsuccessful applicants (and those that don’t even apply) as the successful applicants.
UCeed as a fund is unique because it is combined with Innovate Calgary’s capacity building arm. In some ways, the draw of the fund is an entry point for those who may not be ready for social finance yet to access the resources available through Innovate Calgary, to help them achieve their goals. For Innovate Calgary, helping people access the fund and helping those who don’t require access to the fund achieve their goals in other ways are both wins! “Just come talk to us about your aspirations.” says Jordana. “You shouldn’t be reaching out when you think you’re ready. You should be reaching out much sooner!”
If UCeed sounds like something that would push your initiative forward, check out this 30-minute webinar that covers the what and why of UCeed, as well as application logistics. Innovate Calgary has also created an Investment Readiness Webinar Series that began March 2022, presented by Innovate Calgary in association with local leaders on a number of relevant topics.
There are three intakes a year for UCeed funding, with the next application deadline being February 24th, 2023.
This is an open invitation to those who are curious, to connect with Innovate Calgary, open a conversation about social finance, and start building that relationship. Even if your organization is not ready for social finance, starting the journey now means when you are ready, you will be educated on social finance and connected to the people who can make it happen for you.
Read more at ucalgary.ca/uceed/funds-and-programs/social-impact. And reach out to us at uceedsocialimpact@innovatecalgary.com.
1 https://www.canada.ca/en/employment-social-development/programs/social-finance.html