By Andy Broderick
Long before COVID-19, Canadians struggled with access to affordable housing. Now isolation, unemployment, and mental illness – side effects of the devastating virus – are causing our most vulnerable citizens to become even more vulnerable.
According to the Canadian Mortgage and Housing Corporation (CMHC), home has been a safe refuge for many during this challenging time. Yet 1.6 million Canadians still don’t have access to safe and affordable housing. Systemic discrimination means that it is harder for some communities, such as Black, Indigenous and LGBTQ2S, to access and maintain safe, affordable and stable housing.
Finding innovative and immediate solutions to this housing crisis has become a rallying cry.
The Government of Canada has put in place a National Housing Strategy – a 10-year, $70 billion-dollar plan to give more Canadians a ‘place to call home,’ which was topped up by another $2.5 billion commitment in this week’s federal budget. But the federal commitments are still insufficient to meet the housing affordability needs in Canada, meaning provinces, territories and municipalities are contributing unequally to solve these issues. There is a need for additional sources of capital – social finance is one important path forward.
Social finance is well-established in Canada. It is an approach to investing that provides measurable social and environmental benefits, mobilizing private and philanthropic capital for the public good through social finance intermediaries. Like traditional investments, social finance pays a return on investment while supporting the community and growing the local economy.
Investors have been assisting non-profits and social enterprise for years. New Market Funds, for example, has been delivering investment opportunities with financial returns and lasting community benefit since 2013. The company works coast to coast, managing $65-million of capital from foundations, financial and other institutions, family offices and individuals. New Market Funds deploys money to help solve such issues as affordable housing, greenhouse gas emissions and the lack of access to capital for marginalized populations.
Much of its current activity is focused on affordable housing, with two funds that help finance non-profit and cooperative housing. The latest of these – started just this year and targeting $50-million from Canadian accredited investors – will enable non-profits to buy affordable housing assets that would otherwise be lost to profit-driven entities.
New Market Funds assists community partners in the 30 largest metropolitan markets in Canada by filling equity gaps to help buy a property or complete a project, providing additional equity to expand a project, or investing to allow community partners to take equity out of a stabilized project to fund future projects.
An example of this in action is the partnership with WoodGreen Community Services in Toronto. WoodGreen, one of the largest social service agencies in Toronto, helps people find safe and affordable housing, seniors live independently, newcomers settle into Canada, and marginalized people get off the streets. By harnessing WoodGreen’s expertise, New Market directed private-sector and foundation investment funds to develop 36 new affordable rental housing units for seniors.
Another project in New Market’s expanding portfolio is the West Broadway Commons in Winnipeg. It collaborated with the University of Winnipeg Community Renewal Corp. 2.0, and its many partners to build 119 affordable housing units for students with families, refugees, artists, and Indigenous community members.
These are real initiatives that are making a real difference through social innovation.
In 2019, Ottawa promised a Social Innovation and Social Finance Strategy and a 10-year $755-million Social Finance Fund, neither of which was delivered. In this week’s budget, the government re-committed to dispersing the Social Finance Fund with an initial $220 million in financing over the next two years. The government estimates that this fund could attract up to $1.5 billion in in private sector capital to support the development of the social finance market, create thousands of new jobs, and drive positive social change.
Until the commitment to the Social Finance Fund is realized, Canada remains the sole member of the G7 who has not directly invested capital to accelerate the growth of this critical market of social investment.
Now is the time for the federal government to demonstrate support for social innovation and social finance with a national strategy and Social Finance Fund.
With smart investments, our communities are poised to solve some of our biggest problems and create a more inclusive, prosperous and sustainable future post-COVID.
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About Andy Broderick
Andy Broderick is a managing partner at New Market Funds and helps lead their non-profit multifamily housing development work.
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This post was previously published on QUOI Media and is republished here under a Creative Commons license.
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