Finding investors is no easy feat for social enterprises, nonprofits, and charities.
And when undertaking large projects, such as the purchase or renovation of buildings, or a social venture that focuses on doing good more than the bottom line, it can be extra challenging to fundraise or find willing investors.
However, for enterprises in southwestern Ontario, there’s a unique opportunity — VERGE Capital, Pillar Nonprofit Network’s social finance program. Supported through community partnerships, VERGE Capital makes impact investments available to social and environmental enterprises in Southwestern Ontario.
From Social Finance London to VERGE Capital
The roots of VERGE Capital began in 2013 with Social Finance London. Pillar Nonprofit Network, in partnership with Libro Credit Union, London Community Foundation, Sisters of St. Joseph, and the United Way Elgin & Middlesex, was inspired by the innovative approach to impact-based investing community organizations were exploring.
After receiving funding from the Ontario government and the Ursuline Sisters of Chatham to launch a $500k Startup Fund for local social enterprises, Social Finance London rebranded as VERGE Capital in 2015. Three years later, the program expanded again. In 2018, VERGE Capital partnered with SVX to launch the VERGE Breakthrough Fund, a $2.26 million impact investing fund, the first of its kind in southwestern Ontario.
VERGE Capital has continued to grow into a multi-million dollar program making local investments with local impact. Since 2014, VERGE has invested over $3.4M into over 30 social purpose businesses, community hubs, green energy projects, and affordable housing developments.
What is Impact Investing?
Impact investing provides funds to organizations, projects, and initiatives that generate financial returns as well as positive impacts for the community. James Chan, Manager of VERGE Capital, describes it as akin to buying fair trade. “Similar to how many shoppers consider factors like supporting local, fair trade, or organic when deciding where to spend their money, more and more investors realize that what and where they invest their money also matters.”
“This has given rise to the field of ‘socially responsible investing,’ where investors divest or exclude any investments that have negative implications on issues such as human rights, the environment, or health, for instance. Think of it as the ‘do no harm’ approach,” Chan adds. “Full-on ‘impact investors’ go one step further, where they actively seek investments that generate positive impacts, so that their money has a social, environmental, or cultural return alongside a financial return. One does not have to come at the expense of the other.”
And impact investing is growing. The London Community Foundation, one of the original funders of VERGE Capital, and part of the initial governance team overseeing its development and growth, also maintains a Social Impact Fund. The Community Foundation continues to work alongside VERGE Capital to co-invest in projects that meet both organizations’ mandates, such as affordable housing initiatives. “The challenge with other Foundation funds is all the capital (donations/gifts) given are not able to have an impact – only the income. The Social Impact Fund, and funds like VERGE Capital, change this – by allowing us to do good with both the capital and income,” says Vijay Venkatesan, Vice President, Finance & Operations with the London Community Foundation.
What is Social Impact?
For Chan, social impact means, in a nutshell, making the world a better place. “The slightly more complex answer is to help effect ’systems change.’ The messy, non-linear, long-term process of shifting behaviours, policies, culture, and many other factors to bring about a new way of doing things that is more equitable for people and less harmful to our planet.” Chan adds, “In the context of our work in the social economy, that means a new way of doing business, new ways of spending and investing money, and new ways of thinking about economic growth.”
Venkatesan agrees, “For me, it’s really around an organization, business, entrepreneur intentionally trying to have a positive impact on their community or a community. It’s a measured, strategic and focused effort to achieve objectives/outcomes that are not just financial in nature but to improve a social, economic or environmental determinant of some type.”
Making An Impact
The positive impact that the recipients of VERGE Capital’s loans have on their communities and beyond is immense. These organizations aim to create vibrant, engaged, and inclusive communities across southwestern Ontario.
For example, Carmina de Young designs and manufactures sustainable clothing in London. In addition to the environmental impact, the enterprise has a social impact through its employment of those who frequently face barriers, such as young mothers needing flexible working hours, recent Canadians, and college students.
Another VERGE loan recipient, and the first investee from the program, was the Old East Village Grocer. Owned and operated by ATN Access for Persons with Disabilities, the social enterprise recently closed under the strain of COVID-19, but it provided the community with over three years of employment and training opportunities for persons with disabilities as well as enhanced access to fresh, affordable food for Old East Village residents. The impact of the enterprise has continued both through its loan repayments that can now be reinvested and also through the community and employer partnerships ATN Access developed during the Grocer’s years of operation.
Investing in the Community and Beyond
VERGE also invests in larger-scale initiatives that make broad, powerful changes, such as affordable housing developments, community real estate, and renewable energy projects. For example, Woodfield Gate, financed in collaboration with the London Community Foundation, is a much-needed affordable housing project by Indwell in downtown London. The 67 units, 10 of which are reserved for the Canadian Mental Health Association, are a step toward affordable housing and homelessness prevention.
Many of the recipients have a far more extensive reach than just their immediate communities. For example, Lucky Iron Fish works with organizations around the globe and is now available in over 90 countries. Their small fish-shaped iron cooking tool is used to infuse meals with a healthy amount of natural iron to help prevent iron deficiency and anemia.
More than a Loan
Receiving a loan from VERGE isn’t like getting a bank loan. Recipients have access to ongoing coaching and wraparound support before, during and after financing, including the expertise of the Pillar Nonprofit Network. The VERGE Capital team works closely with other social enterprise supports provided by Pillar Nonprofit Network and Libro Credit Union, to provide guidance on legal structures, business planning, impact measurement, market knowledge, and more.
Learn more about VERGE Capital and how you can get involved on their website.
This post has been powered by Pillar Nonprofit Network. Pillar Nonprofit Network strengthens individuals, organizations and enterprises invested in positive community impact.
Feature photo courtesy of VERGE Capital.