They knew the zoo was interested in building a biogas facility that could turn manure from elephants, giraffes and other animals into renewable electricity and heat. They also knew that after several years of trying the zoo, despite its good intentions, couldn’t make it happen. The project it envisioned was simply too complex and risky for commercial investors. Bida proposed a new approach: build a smaller, more manageable facility and open up investment to the broader community through the issuance of bonds. He was inspired after watching Toronto’s Centre for Social Innovation (CSI) purchase and retrofit a building using $2 million it had raised selling community bonds at $10,000 apiece. The bonds, which could be purchased by anyone, offered a 4 per cent annual rate of return over five years and were RRSP-eligible. If the banks wouldn’t lend the money to a not-for-profit organization like CSI, then individuals who support the organization’s mandate just might. Tapping into CSI’s “social asset” proved a good gamble, as the community was quick to scoop up the bonds.

Local stock exchanges once were common but faded as face-to-face trading shifted to electronic platforms and the biggest U.S. stock-exchange operators acquired smaller rivals. Among the few remaining exchanges, the former Philadelphia Stock Exchange is now an options exchange owned by Nasdaq OMX Group Inc. A minicomeback might be around the corner. In April, Hawaii lawmakers agreed to begin examining the state's securities laws to possibly create a "locally focused, Hawaii-based stock exchange."

In Toronto, organizers of the Social Venture Exchange, or SVX, are expected to launch this summer a specialized exchange to link institutional investors with local companies having a social or environmental impact. The fledgling market is backed by Toronto Stock Exchange owner TMX Group Inc. Local exchanges are also in the works in Europe, Africa and Asia.

But other efforts at "loca-vesting," as the concept is known, have struggled. Investbx opened in 2007 in the U.K. city of Birmingham to serve small companies in the West Midlands region. Last month, the exchange was sold for a token £1 ($1.6352) after bringing just three companies to market and absorbing more than £3 million ($4.9 million) in public subsidies.

We’re thrilled that several of our Oxford MBA students and faculty have the opportunity to attend the event and help out our friends over at SOCAP.   They’ll be keeping us posted on all the latest and their perspectives on the gathering. If you can’t make it to Amsterdam, be sure to follow along online and keep up with all the buzz on twitter at #socapeurope (Tweets are a’flying!). You can also watch the entire event via livestream. We’re excited to see what comes out of the gathering – a few hours in, and already looks like exciting things. For one, check out the newly released Social Investment Manual by the Schwab Foundation.  Looks like a must read.

SOCAP, the conference at the intersection of money and meaning, came to Europe last night at the Beurs van Berlage in Amsterdam. Since I was volunteering at the conference, I was unable to witness the  keynote speech by HRH Princess Maxima, UN Secretary General’s Special Advocate for Inclusive Finance for Development.

For a new Conservative government looking to make a tangible and lasting mark on our society, there would seem to be no better alignment of values and opportunity than that represented by the burgeoning social finance movement. It represents a ready-made opportunity, rooted in values of community-building, support for small scale entrepreneurship, and the role of private investment in delivering public good, that the government would do well to seize.

At its core, social finance (or its semantic cousins: “impact investing”, “mission-based investing”, etc.) is about incenting innovation. Let’s face it, we all assume that the large challenges facing our society (things like child poverty, climate change, health care, etc.) can only be solved by government or big corporations.

The Task Force, in its report, identified a number of concrete steps that governments could take in this regard, primarily around the tax treatment of such investments. As an example, the report points out that Canadian foundations are specifically prohibited under the Income Tax Act from conducting any “unrelated business activity”, while similar provisions in the U.S. and U.K. tax codes have been removed in recent years. Canadian governments have indicated a growing level of interest in the potential that social finance holds. The federal government made a supportive statement for social finance in its 2010 Speech from the Throne, and provinces like Nova Scotia and Quebec have set up their own social finance funds. Ontario very recently inaugurated a Social Innovation Wiki, through which social entrepreneurs can share lessons on things like access to capital.But governments can and should do more, starting with the federal government. The upcoming Speech from the Throne would seem a perfect opportunity for a government looking to define its vision for the country to re-affirm the potential of social finance, and to lay out a roadmap for how Canada will move forward on this opportunity.

Will the social impact bond ever attract commercial capital? At least one professional investor believes it eventually will - although he doesn't think it will be quick or easy. The social impact bond was introduced last year as a means of funding early interventions on reducing reoffending, drug use, the number of children in care. The model for the social impact bond is that  investors gives charities money to carry out a long-term payment-by-contract. In exchange, they get any profits the contract generates. In theory, the benefits go to both sides. If the contract works, the investor can make a large return on his money. In the meantime, the charity has a guaranteed income and the freedom to work on its project. However a key question yet to be answered is whether it will really prove attractive to investors.

Cohen, Sir Ronald Chairman, The Portland Trust and Bridges Ventures Director of Social Finance Sir Ronald Cohen is Chairman of The Portland Trust and Bridges Ventures and a Director of Social Finance. He was the founding partner and former chairman of Apax Partners. Founded in 1972, Apax Partners is one of the world’s leading private equity investment groups, operating in nine countries across Europe, the USA, Israel and Japan. Apax advises and manages funds of over $35 billion. Sir Ronald is member of the Harvard Board of Overseers, on the Board of Dean’s Advisers at Harvard Business School, a Vice-Chairman of Ben Gurion University and a member of the University of Oxford Investment Committee. He is also a Trustee of the British Museum. He was a founder director and past chairman of the British Venture Capital Association and a founder director of the European Venture Capital Association. He was also a founder and former Vice-Chairman of EASDAQ and former director of NASDAQ Europe. He was Chairman of the Social Investment Taskforce and the Commission on Unclaimed Assets. He has recently published “The Second Bounce of the Ball – Turning Risk into Opportunity” about entrepreneurship. He is a graduate of Oxford University, where he was president of the Oxford Union, an Honorary Fellow of Exeter College, and has an MBA from Harvard Business School, to which he was awarded a Henry Fellowship. Recipient of the HBS Alumni Achievement Award.

2011 Impact Investing Summit The Impact Investing Summit (iiSummit) aims to mobilize the power of private capital in the Midwest for social and financial return. Impact investing is an emerging asset class that is gaining increased recognition from institutional investors, high net worth individuals, and private foundations. In this nascent industry, there is a range of options around financial returns, type and location of investment, and potential exits. The iiSummit will bring together national experts in this field—including members and advisors to private foundations; State Department and SBA representatives; and institutional, venture capital, and individual investors—to explore impact investment options for the Midwest.

Invited Keynote Speakers Dave Kirkpatrick, SJF Ventures Sasha Dichter, Acumen Fund Dave Chen, Equilibrium Capital Wes Selke, Good Capital & Hub Ventures Tom Balderston, Investors' Circle & Patient Capital Collaborative Patrick Fisher, Creation Ventures Deb Quazzo, NeXtAdvisors Karen Lehman, Fresh Taste Initiative Keith Crandell, ARCH Venture Partners and Clean Energy Trust

The lazy yet dominant financial market preconception of social entrepreneurs is of fluffy tree-hugging do-gooders who couldn't cut it in the 'real world'. Indeed, my peers from business school and the financial markets in the City still think I am simply going through a 'charity phase' and will eventually return to the fold. But I'm not going to. I have been lucky to come across a pioneering market place and I'm signed up for the duration. Social enterprise is about sustainability, financial viability, commercial solutions to social needs. It is not about inefficiencies of investment, or the black hole of grant donations. The guys at SOCAP in San Francisco name this space the intersection of money and meaning. What are we at UnLtd doing to help increase the awareness of this intersection? For a start we've just launched the Big Venture Challenge to accelerate the entry of business angels into the social investment market place. We are looking to find 25 of the most ambitious social entrepreneurs with scalable ventures - and then 'de-risk' any investments by providing matched funding and some high calibre support from ourselves, Accenture, Deutsche Bank, Coutts, Thomson Reuters, Hogan Lovells and others.

This is certainly an international phenomenon, albeit operating at different paces throughout the world, but with clear exporting/importing of talent, knowledge and experience: The UK market place has been swamped with interest in how to replicate our own work with both government-led as well as private delegations from Canada, Vietnam, China, Thailand, Japan, Australia and Continental Europe just in recent months. UnLtd ourselves now have three sister organisations, which operate different business models, but with the same vision of helping social entrepreneurs in India, Thailand and South Africa, with many more in the offing. Similarly, the UK's School for Social Entrepreneurs has expanded to Australia and has many more international partners queuing up. Volans is now operating out of London and Singapore.There is the Global Impact Investing Network and the Global Impact Investing Reporting Standards coming out of the US but with international intentions (it's in the names!)There are (formative) social stock exchanges/trading/donation platforms in the US, Singapore, Italy, Brazil, UK, South Africa, KenyaThere is a well established European Venture Philanthropy Association, with a sister organisation opening in SingaporeWe have SOCAP Europe for the first time bringing a US conference to The NetherlandsThere are also a glut of crowd-funding mechanisms evolving to avoid traditional financial machinery, harnessing the Facebook generation: Kiva, MyC4, CrowdCube, Profunders, Buzzbnk, Ethex, Markets for Good.

Unlike charities community interest companies can't use tax relief to raise capital through social impact bonds, and it may not happen anytime soon, say experts

Lodhir offers social impact bonds, developed in partnership with law specialists Clifford Chance – acting on a pro bono basis – to a handful of investors that cost between £2,000 and £3,000 each, from which he hopes to raise enough capital to run the pilot.Lodhir says his organisation's own research suggests the scheme could reduce re-offending rates by up to 60%. And, he says, it could result not only in multiple returns to investors, but also in multiple savings to the taxpayer, through reduced healthcare and re-offending costs and in tax and national insurance contributions from those ex-offenders whose businesses take off."The savings come almost immediately," he says. "But when I contact potential investors, they say, 'oh we only donate to charity'. But building an enterprise culture won't happen with donations – more innovative solutions are needed."John Mulkerrin, chief executive of the CIC Association, thinks the sector is unlikely to win tax reliefs outright from government. "That will come after we've raised £1bn [as a sector] and we offer to turn it into £100bn," he says. "A tax break would be fantastic, but it's not likely to happen because I doubt the sector is mature enough yet."

He believes if government is serious about social enterprise, it must make the social investment market just as attractive to investors as charitable donations: "I think CSR is a corporate tax savings initiative. If so, let's include social impact bonds. Why not?"

Supply and demand. A simple framework for market analysis that can reveal complex insights.  The social capital market is no exception to that rule. Recent years have seen an explosion of funds flowing into this space, increasing the supply of growth capital available to social entrepreneurs to new levels. However, within this same market, the number of social businesses ready and able to demand these funds has not kept pace. While fund creation continues at rapid speeds, the market reality for most fund managers continues to be an insufficient pipeline of investable projects in which to place this capital.  Even a basic course in economics suggests who should hold the bargaining power here – those demanding the social capital, a.k.a. the social entrepreneur.  But if this should be the case, why have the conversations on social investment been overwhelmingly dominated by investors? They dictate investment terms, develop a common investor language, create burdensome due diligence requirements for investees, force “cookie-cutter” financing instruments on complex business models, and demand an endless list of documentation. The social entrepreneur is left catering to their wishes, often sacrificing their main reason for existing in the first place – creating social impact.

The Social Investment Organization (SIO) recently released Impact Investing in Canada: A survey of assets. The study found $4.45 billion in impact investing assets in Canada, a dramatic increase from $1.4 billion only two years earlier. This includes community loan funds, credit union community investments, international impact investments, aboriginal financial institutions, Community Futures Development Corporations (CFDC) and investments through development capital and solidarity finance institutions in Quebec.

This webinar will take the format of a roundtable discussion. All participants are invited to consider a set of questions before the webinar and participate in an open discussion to be moderated by David Wood David Wood, Director, Initiative for Responsible Investment, Hauser Center for Nonprofit Organizations at Harvard University. The aim of the webinar is to generate a lively debate between academics, experts and practitioners around some of the key questions surrounding the concept of impact investing.

The human capital performance bond proposal differs from the more familiar social impact bond in three important ways: It is truly a bond.  The social impact bonds -- as used in the UK, explored by the Rockefeller Foundation and Nonprofit Finance Fund in the U.S., and profiled here on SocialFinance.ca -- are really equity investments where the investor’s capital is at risk. Consequently, rates of return can run as high as 14%. Not the case in Minnesota. Rather, investors are essentially guaranteed their money back and the rate of return is expected to be around 4%. The anticipated upside of this model is that a lower required rate of return means more organizations will be able to demonstrate economic value that beats that rate and thus allows them to compete for these new funds. The payment timeline is different. In the social impact bond model, organizations receive the cash upfront and must hit pre-determined benchmarks in order for investors to get their money back. With human capital performance bonds, the organizations (mostly nonprofits) carry most of the risk and are only paid if and when they achieve their goal. They would need to secure PRIs or patient capital to meet their interim cash flow needs. The incentives are different. Social impact bonds depend on investors engaging in a due diligence process to evaluate the likely effectiveness of particular social interventions. The model thus uses investors to create the market forces that purportedly will enhance the efficiency of resource flows. The human capital performance bond proposal, in contrast, does not give investors that role.  An intermediary (details yet to be worked out) would fill this gap.

Late last week, Governor Deval Patrick and the Commonwealth of Massachusetts quietly released a Request-for-Information (RFI) on an esoteric new public financing concept. The state cautiously issued its RFI without much fanfare. No trumpets or flags, just an understated press release announcing its interest in the issuance of a Social Impact Bond.

Let's be clear: SIBs are not a silver bullet. The very nature of a capped return probably means that SIBs will need to be kick-started by philanthropists and other "impact-first" investors with PRIs before they gain mainstream acceptance. Unlike conventional fiduciaries, philanthropists more easily can square SIBs with their investment priorities. Nonetheless, if this model is proven to work, such experimental philanthropy might be viewed as the venture capital of an era of social innovation.

As the field evolves, we should expect to see a flurry of new groups seeking to design such public-private partnerships. Today the field is sparse. Social Finance, a US group launched by Sir Ronald and Mr. Blood, presently appears to be the only significant player in the field. But, many more will come as impact investors, social entrepreneurs and new intermediaries spring up to scale SIBs and launch new innovations.