Hot! Diane Finley turns promising social finance idea into polarizing policy

TheStar.com – opinion/editorialopinion
November 20, 2012.   By Carol Goar, Editorial Board

Human Resources Minister Diane Finley landed with a thud on the fragile terrain between commerce and charity this month. Her dust clouds threatened to choke off a grassroots campaign to create a new, market-friendly kind of philanthropy.

That was not the minister’s intention. She was looking for a cheap way to deliver social programs.

But her Nov. 8 announcement — Ottawa has decided to make a bold foray into social finance — provoked a sharp debate between left and right; do-gooders and deficit-cutters; non-profit workers and public-spirited entrepreneurs who use their earnings to do good.

Politicians and pundits rushed to the barricades. “This is a plan to privatize public services,” said the NDP’s Nycole Turmel. Quite the contrary, Finley insisted: “As we continue to struggle with social and economic challenges that appear to defy resolution — think of homelessness, youth crime and persistent unemployment — we must look at new ways to unlock innovation in local communities.”

There is a middle ground. For almost a decade a group of community activists, entrepreneurs, financiers and public figures had been working quietly to make it safe. It was an example of civil society doing what governments seldom do: work across partisan lines; bring in innovative thinkers with no expectation of gain; lead by example.

In Toronto the trailblazers included architect Margie Zeidler; Bill Young of Social Capital Partners; Tonya Surman of the Centre for Social Innovation; Michael Labbé, a private developer of affordable housing; Anne Jamieson of the Toronto Enterprise Fund; Stanley Hartt of Macquarie Capital Markets; Ilse Treurnicht of the MaRS Centre and Elisha Muskat of Ashoka Canada.

In Montreal the linchpins were former prime minister Paul Martin and Nancy Neamtan of the Chantier de l’Économie Sociale. In Vancouver, the wellspring of activity was Van City Credit Union led by Tamara Vrooman.

As the movement grew, these pioneers learned to bring people along gradually, showing them that the benefits of social enterprises outweigh the risks.

But patience and trust-building aren’t Finley’s style. She wants proposals by Dec. 31. She aims to include specific initiatives in next spring’s budget.

It’s true that some advocates of social financing lobbied Ottawa for recognition and support. But they sought changes in the tax code to loosen the definition of charity (allowing self-financing social organizations to qualify for tax credits) and reward individuals who invest in these public-spirited enterprises. They never envisaged being enlisted in the government’s austerity drive or its crime crackdown. They certainly never intended to relieve the government of its responsibility to provide basic help for the poor, disabled, homeless and unemployed.

With open-mindedness and flexibility, a new consensus is possible.

Here are the points of agreement:

• Social financing is a good vehicle to build affordable housing, launch environmentally sustainable businesses and incubate businesses that provide jobs for individuals who need training and accommodation.

• Government funding would provide an incentive for investors to get involved in the social sector, which hasn’t benefitted from traditional philanthropy the way health care, the arts and higher education have.

• And modernizing the tax code would lead to a blossoming of organizations that use market principles to accomplish social goals.

Here are the points of contention:

• Finley’s model would compel social agencies to split their focus between their clients and the investors on whom they depend.

• It would undercut charities such as the John Howard Society andHouselink that work selflessly to make life better for outcasts and indigents.

• It would reduce the motivation for volunteers and donors to give altruistically. And it would blur the lines of accountability.

There are ways to balance these costs and benefits, but it will take more than 51 days to dissipate the ill will Finley has unleashed.

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