Ottawa picks three managers for a $400-million social finance fund

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Ottawa has chosen three investment groups to manage a new $400-million fund aimed at expanding the country’s social finance market and attracting more private-sector capital to invest alongside.

Karina Gould, Minister of Families, Children and Social Development, is announcing on Monday that the managers will offer financing to social enterprises, non-profits, charities and co‑operatives that focus on solving specific societal problems such as affordable housing, food insecurity and poverty. Such organizations have historically had more difficulties than traditional businesses accessing capital through conventional channels.

Boann Social Impact LP, Fonds de finance social – CAP Finance, and Realize Capital Partners will invest the $400-million in government money over the next five years, and look to attract another $800-million in private capital in efforts to expand the market for enterprises that prioritize racial and gender equity, environmental and other socioeconomic goals.

Boann is a newly formed joint venture of the social purpose fund manager Encasa Financial and the Table of Impact Investment Practitioners Trust, a group that includes more than 80 Canadian social finance intermediaries.

CAP Finance brings together several Quebec-based institutions, led by Réseau d’investissement social du Québec and Fiducie du Chantier de l’économie sociale. Realize Capital is an alliance that includes impact fund manager Rally Assets and early-stage venture capital fund manager Relay Ventures.

CAP Finance will concentrate on investments in Quebec, while Boann Social Impact and Realize Capital Partners will invest in the rest of Canada. They won the mandates following a competitive call.

The initiative is aimed at helping the country meet its United Nations sustainable development goals, which focus on areas such as sustainable agriculture, microfinance as well as accessible health care and education.

The government’s last social innovation and social finance program was in 2022, with 26 organizations, including the Canadian Women’s Foundation, Buy Social Canada, Congress of Aboriginal Peoples, Co-operatives and Mutuals Canada and African Caribbean Business Network, receiving money from a $50- million fund.

Under the new program, the fund managers will place the funds with intermediaries that raise capital to make social finance investments, and social purpose organizations will apply to them for financing. The managers are expected to allocate a minimum of 35 per cent of their investments to programs promoting greater social equity, including a minimum of 15 per cent into initiatives that promote gender equality.

Under the plan, Boann will receive $154.1-million to invest through the 2025-26 fiscal year, CAP Finance will get $89.8-million, and Realize will receive $153.4-million. Most of the funds are expected to be repaid by the end of the program.