Community Economic Development: What Is It, and Why Should it Matter to Corporate Canada?

Edward T. Jackson Carleton University

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Community Economic Development: What is It?

A field of practice in which community-based non-profits:      blend business and social techniques mobilize both local and external resources to reduce poverty and unemployment and revitalize geographic communities (rural and remote areas, urban neighbourhoods) or communities of interest 2

What Does CED Look Like?

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Community development corporations Community Futures Corporations Co-operatives (consumer, producer, worker, multi-stakeholder) Businesses owned by social-service non-profits or charities Aboriginal development corporations Community land trusts Community loan funds Micro-finance programs Social venture philanthropy 3

Why Should CED Matter to Corporate Canada?

    CED contributes to solving social problems Stronger communities have healthier economies Local heroes need allies CED is good for the corporate bottom line 4

The Business Case for Corporate Support of CED

CED is a tool for corporate social responsibility that generates benefits to corporate partners, including:        Reputational gains among investors and the public Open policy and regulatory relations with government Brand differentiation Customer loyalty Employee recruitment and retention Procurement savings A “social license to operate” 5

Corporate Social Responsibility through Social Community Economic Development

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Strategies:

 Grantmaking to CED projects 

Venture philanthropy

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Joint ventures

 Procurement from community enterprises 

Employee volunteer engagement

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Hot-Button” Policy Issues and CED Initiatives

Policy Issue Knowledge Area CED Initiatives

URBAN

 Homelessness in cities  Homelessness and poverty  Cultural exclusion/separation    Women’s entrepreneurship Microfinance programs Individual development accounts  Youth gang/gun violence  Youth entrepreneurship   Non-profit and co-operative housing projects Social enterprises employing the homeless   Community loan funds and microfinance programs for immigrant women Savings incentives for immigrant women  Youth-run enterprises in multi-media, cultural products, services, small scale manufacturing 7

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Hot-Button” Policy Issues and CED Initiatives

Policy Issue

RURAL

 Softwood lumber dispute

Knowledge Area

 Forestry sector

CED Initiatives

 Mad Cow disease  Aboriginal poverty  Agriculture and rural economic diversification  Aboriginal business development   Value-added wood manufacturing Multi-stakeholder, sustainable forest management     New meat and crop production Local food-processing facilities Tourism expansion E-marketing and e-commerce  Procurement of goods and services from Aboriginal businesses (eg. equipment, supplies, transport, tourism etc.), including technical advice, quality standards and working capital 8

Capital Markets for Community Economic Development

Grants

0 $10K $50K $100K $250K $500K •Governments •Development Agencies •Foundations •Corporations $1M $2M •Governments •Regional Agencies •Corporations $3M $4M $5M $6M $7M

Loans / Equity

0 $10K $50K $100K $250K $500K •Community Futures •Community Loan Funds •Credit Unions •Social Venture Capital •Banks •Corporations •Credit Unions •Business •Regional Agencies •Labour Funds •Banks $1M Development Bank $2M $3M $4M •Corporations •Credit Unions •Targeted Pension Investments •Regional Agencies •Labour Funds $5M $6M $7M 9

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Intermediaries Optimize CED Success

Forms: Community development corporation, non-profit umbrella, foundation, program, network, consortium Functions: Technical assistance (consulting, training, business planning, market studies); financing (grants, loans, equity); management support; political support (promotion, lobbying, regulatory change) Funding: Foundation, corporate and government grants; loans and other program-related investments; contracts; enterprise surplus; asset appreciation; private philanthropy; donations and gifts; volunteer time Factors of Intermediary Success: Leadership (skills, vision continuity, succession); structure (flexible, evolving); strategy (growth opportunities, backward and forward linkages, first-mover advantage); management; human resources; innovation; replication and scaling up; financing (diversification of revenues); accountability 10

Case Study – New Dawn Enterprises

Government Grants/Contracts Corporate Partnerships • Home Depot Cape Breton Association for Co-op Development 1973

New Dawn Enterprises

(Non-Profit CDC) New Dawn Holdings • Investment Firm BCA Holdings • Venture Fund (Equity, Loans) Cape Breton Association for Housing Development •Real estate company for affordable housing Cape Care Services Ltd.

•Home Care Services Credo •Business processes outsourcer  Highland Resources Ltd.

Private career college Sydney Senior Care Home Living Ltd •37-bed program New Dawn Guest Home Ltd.

• 30-bed residential care facility Pine Tree Park Estates • revitalized military base

Source: newdawn.ca

David Realties • Commercial landlord 11

Case Study –

Social Capital Partners

Bill Young/ Bealight Foundation Research on SROI/ Evaluation

Social Capital Partners

Social Venture Portfolio Grants, Loans, Equity Sector and Policy Engagement Renaissance, Montreal Inner City Renovations, Winnipeg •$100K equity •$100K loan •Used to test new ideas in •$50 K grant and board involvement marketing, merchandizing and pricing

Challenges

• “Dearth of great social entrepreneurs” • Lack of sophisticated business models • Limited sources of social capital Social Enterprise

Sean VanDoorselaer, “Venture Capital for Social Enterprise,” Making Waves, 15(3), 2004, 10-13

Social Enterprise

Investment-Decision Steps

1. Concept Review 2. Business Plan Review 3. Due Diligence 4. Alignment and Deal structure 5. Investment and Ongoing Working Relationship 6. Monitoring and Reinvestment 12

Evaluation of Community Economic Development

Evaluation Defined:

Assessment of social, environmental and commercial results, lessons learned and accountability systems by key stakeholders.

Promising Methods:

    Return on Taxpayer Investment (ROTI) – Input-output modeling of direct, indirect and induced effects of government-supported interventions Social Return on Investment (SROI) – Method for assessing the social costs associated with the individual employees and the community enterprise itself (Social Capital Partners, Roberts Enterprise Development Fund) Enhanced Value-Added Statement (EVAS) – Quantifies the value of social impacts and volunteer contributions of a non-profit or cooperative (Quarter et al, OISE/UT) Return on CSR investment in CED to the corporate bottom line (surveys, focus groups on stakeholder perceptions and decisions) 13

Questions

 If your company is not engaged in CED, what else do you need to know in order to decide on taking action?

 If your company is engaged in CED already, what strategies can you use to increase the impact of your efforts?

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Useful Websites

Blended Value Project (tools for social return on investment) Canadian Business for Social Responsibility Canadian Community Economic Development Network Chantier de l’économie sociale Community Economic Development Technical Assistance Program Conference Board of Canada Imagine Canada Harvard Business School – Initiative on Social Enterprise Making Waves (Canadian CED newsletter) Social Capital Partners (social venture capital) Stanford Social Innovation Review Skoll Foundation (grantmaking to social entrepreneurs) VanCity Credit Union Vibrant Communities Project (15 Canadian cities, including Victoria) blendedvalue.org

cbsr.ca

ccednet-redec.ca

chantier.gc.ca

carleton.ca/cedtap Conferenceboard.ca

imaginecanada.ca

hbs.edu/social enterprise cedworks.com

Socialcapitalpartners.ca

ssireview.com

skollfoundation.org

vancity.com

vibrantcommunities.ca

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