Saturday, May 11, 2013
Lots of new ideas in Canada, just waiting for a government to lead with courage and vision
She said nothing about changing the tax code to reward investors who commit money to social projects. That is what proponents of social financing want. They believe investors who provide upfront cash for social projects should qualify for the same tax credits as philanthropists who give money to hospitals, art galleries and universities. (from "Diane Finley seeks market solution to deeply-rooted social problems: Goar" by CarolGoar, Toronto Star, May 10 2013 below)
Mobilizing private capital to do the government's work is, among other things, another shot across the bow of the social safety net that has been and must continue to be underwritten, designed and executed by the government. It is also a shot across the bow of public service workers whose job it is to design new approaches to the many social ills that undermine both productivity and income and investment levels, not to mention lifestyle options.
When the government literally despises the public service, and sees all of its members as a 'drain' on the public purse, without a bank vault of innovative ideas to meet the problems for which it doles out millions, that is not a failure of the public service. It is a failure of the government to marshall the best ideas, to bring together the professional stakeholders and bring about social policy that generates the kinds of positive results that everyone wants. Not only would this be a legitimate sign of leadership and accepting responsibility on the part of the government, it would also provide considerable authentic fodder for a successful political campaign in the next election because it would restore the trust between the electorate and the government for its handling of extremely difficult and complex and long-standing social gordion knots.
We have known for decades that a paucity of ideas has never been a problem in this country. New ideas abound in every coffee shop, research lab, social think tank and political brain-storming sessions across the land, including most editorial rooms of most dailies. What we as Canadians lack, and we have also know this for decades, if not centuries, is the guts and the foresight to risk both the necessary trials for the implementation of ideas, and that includes managing the funds to support clinical trials in the social laboratories of our universities, our schools, our hospitals, our social service agencies and, especially, our governments where the fear of public ridicule for attempting ideas the public scorns will result in such public embarrassment that the measure is left to gather dust in the archives of all our public organizations.
We love to talk and to dream about new ideas but we hate the thought of having to sell them to a public that is so resistant to change that we have a national equivalent of a bowel obstruction blocking the delivery of innovation. We simply refuse to permit even the professionals, well trained and schooled in the design and delivery of new ideas, to execute, and our governments are notorious for funding little, unknown and confidential projects that never see the light of day, unless and until some courageous politician or university president, or some visionary thinker puts his/her heft behind them and brings them to the public's attention.
We have a deficit of believing in our great ideas, except those that were introduced a hundreds years ago, like the national rail systems, or a half-century ago like the national health care system....but it is the government's job to unlock the bubbling ideas from the think-tanks, and the doctoral theses, and the research labs and bring them to the public for execution, even if there are tweeks that are necessary to make them more sophisticated, more fiscally sound, and more sustainable for the clients for whom they were designed in the first place.
Let's just look at one such idea, so long studied and included in public address of social scientists, politicians, religious thinkers and prophets....the guaranteed annual income. The most recent public voice for this idea is Senator Hugh Segal whose is making the progress of a snail among his own party, Conservative, because that is what we do to a new idea whose time has long ago come....and not gone!
Quit looking for profit from everything, Ms Finley, and start putting the prophet back into our national life!
We need government capacity to govern and we need it now....not the capacity to generate public relations campaigns, advertising campaigns and faux policy ideas....
Generate the kind of tax policy that rewards those with the gift of philanthropy of both ideas and funds and uncap the blocked capacity to bring our innovation to the real world, and let Canadians start to believe that living here means more than harvesting nature's ore, and crude and timber and wheat and then selling it abroad....we are more than heuwers of wood, drawers of water, miners of ore and fishers of seafood.
And lets demand that our government lead on substance and on policy and not on another one of their interminable self-congratulatory, pompous and presumptuous media blitzes.
And public funds for start-ups and for a legitimate and sustainable system for bringing the plethora of useful, and perhaps even profitable ideas to the table for execution, will be necessary...and all Canadians, not just the small hard-core constituency that supports this government, stand to be winners.
Diane Finley seeks market solution to deeply-rooted social problems: Goar
Diane Finley unveils scheme to pay investors to tackle nation’s biggest social challenges
By Carol Goar, Toronto Star, May 10, 2013
The private sector will supply the cash. The non-profit sector will provide the ideas and deliver the programs. The government will “harness the power of social finance.”
That, in a nutshell, is Human Resources Minister Diane Finley’s formula for tackling Canada’s most deeply entrenched social challenges: chronic poverty youth unemployment, homelessness, aboriginal despair.
“We must look at new ways to unlock innovation in local communities,” she told 200 female business executives and non-profit leaders at the inaugural Women in Social Business Forum this week. “We need continued partnership from public, private and not-for-profit sectors to improve results and maximize our investments.”
She is confident Canadians are ready for a new approach. Last November she put out a call to non-profit organizations, businesses, charities and citizens for concepts “that could help our government address some of our social challenges in new and different ways.” Within three months, she received 154 submissions. “The response exceeded our expectations,” she told her audience.
What wasn’t clear in Finley’s speech or her department’s background documents was the role she and her government would play.
She was explicit that Ottawa would not be a financial contributor — quite the opposite. The aim of the initiative is to “mobilize private capital” to do what the government has always done or paid social agencies to do.
She said nothing about changing the tax code to reward investors who commit money to social projects. That is what proponents of social financing want. They believe investors who provide upfront cash for social projects should qualify for the same tax credits as philanthropists who give money to hospitals, art galleries and universities.
Finley was manifestly right about one thing: there is no shortage of creative ideas bubbling up at the local level. Visit almost any Toronto neighbourhood and you’ll find pioneering business-charity hybrids. Visit the Centre for Social Innovation and you’ll see people turning their passion for a fairer, greener, more inclusive city into socially motivated businesses. Visit the MaRS Centre for Impact Investing and you’ll find policy-makers, community leaders and corporate types putting their heads together.
What’s holding things back is an acute shortage of funding. Without an angel investor, many social ventures can’t get off the ground. Canada has a handful of these investors: community-spirited individuals, enlightened businesses and large pension funds. But most financiers regard social enterprise as a high-risk, low-return proposition.
Although Finley did not address this dilemma directly, her report, Harnessing the Power of Social Finance, provided a couple of clues about her government’s intentions:
•It highlighted pay-for-performance agreements. These are pacts between the government and a social agency in which the government identifies the result it wants and undertakes to pay the social agency only if that result is achieved.
•It also shone a favourable light on social impact bonds. These are three-way arrangements in which a social agency pairs up with a private investor willing to underwrite its project and the government specifies the desired outcome. If it is achieved, Ottawa returns the investor’s principal and pays a predetermined profit. “This allows the government to use funds otherwise spent on services like counselling, health care or detention to reward investors,” according to the report.
It is easy to see why the government likes these schemes. They produce quantifiable gains. They give Ottawa control without requiring a financial commitment. And they allow federal politicians to cut payroll costs while maintaining — perhaps improving — public services.
It is harder to see the appeal for private investors. They would be taking a big risk for a modest payback.
It is also hard to fathom why a non-profit social agency would want to make profits for a private investor.
Taking a positive view, the minister’s approach could stimulate fresh thinking, strengthen cross-sectoral bonds and tap into the good will and resources of retiring baby boomers.
Taking a less sanguine view, her quest to impose market discipline on the social sector could undercut churches and charities, stifle true altruism and blur the lines of responsibility.
It is a question of balance. Finley hasn’t got it quite right.