Introducing the Solutions Finance Accelerator
The Foundation has launched the Solutions Finance Accelerator, with an initial commitment of $2.5 million. The goal is to efficiently and effectively scale the amount of private capital directed toward areas of great need and opportunity.
It’s clear that the combined funds of all Canadian philanthropic funders would scarcely come close to solving our biggest social, economic and environmental problems. The much larger pool of available private capital could help fill this gap. As one of the growing number of impact investors in Canada and after 12 years of activity in this field in Canada, we have identified a further gap: the need to strengthen intermediation to mobilize private capital at scale.
The McConnell Solutions Finance Accelerator program is designed to provide support to intermediaries working on innovative financial products that address market gaps in domains aligned with the United Nations Sustainable Development Goals and the Foundation’s mission. Intermediaries could include (but are not limited to): financial institutions, funds, trusts, platforms, non-profits, co-ops, social enterprises or other financial entities constituted under Canadian law.
The Accelerator is open for intermediaries in two stages of investment readiness:
This group includes intermediaries who have moved past the concept and pilot stages. They have brought together individuals with complementary expertise who together have thought through and designed financial models that are sustainable and innovative. They now require support in conducting market research, further engaging with stakeholders, completing their legal framework, and developing the deal-flow of projects.
This group includes intermediaries that have achieved the milestones of the feasibility stage and are almost ready to operationalize their project. They may require support to test their models, scale their operational systems, hire additional talent, implement a strong governance model, and, most importantly, attract long-term private capital.
Want to know more about the Accelerator? We have answers
How will the Solutions Finance Accelerator help achieve better social, economic and environmental outcomes?
The premise of the Accelerator is that by putting private capital to work through financial intermediaries that are responding to Canada’s urgent social, economic and environmental challenges, the country has a better chance of achieving the United National Sustainable Development Goals. When public and philanthropic funds are supplemented by the much larger pool of available private funds, we can create solutions that are of the scale required for large-scale positive impact. Financial and investment intermediaries are the primary mechanism by which we can pool different types of capital. That is why we have chosen to support them in an effort to fill the financing gap.
Canada already has a $755M Social Finance Fund (SFF). What’s the relationship to the Accelerator?
The Solutions Finance Accelerator is complementary to the Social Finance Fund. Financial intermediaries with innovative tools and scalable models are strategically poised to effectively and efficiently invest the SFF funds in ecosystems across Canada. They operate within communities and serve as a bridge between investment stakeholders and organizations solving Canada’s most acute challenges. This initiative is striving to substantially increase the number and types of intermediaries by providing them with the needed support to get off the ground and mature. Their work will ensure that the Social Finance Fund is properly activated and scaled through attraction of private capital partners.
How is this program complementary / different from McConnell’s Social Innovation Fund?
The Social Innovation Fund (SIF) provides grants in two categories: Early Stage Consolidation — for community sector organizations to create the capacity and conditions to effectively sustain their work — and Re-tooling for Growth — for established organizations already operating successful social innovations so that they scale up to meet growing demand. The goals of the Accelerator are in some cases complementary but in all cases rather different. Applicants for the Accelerator are not expected to do the frontline or development work that organizations applying to the SIF do. They are expected to focus on financial innovation in support of community organizations. Specifically, they are working on mechanisms to increase the availability of capital for community organizations and sustainable development projects. As noted above, they should be financial institutions, funds, trusts, platforms, non-profits, co-ops, social enterprises or other financial entities constituted under Canadian law.
Is a commitment of $2.5 million enough?
The $2.5 million from McConnell is a start. We want to expand the Accelerator program in collaboration with partners. If you’re interested in becoming involved, get in touch with the Solutions Finance Team!
Beyond Impact Investing, Towards Solutions Finance
Successful systems innovation requires adequate resourcing and calls for new forms of capital allocation across the multiple stages of design and implementation. In many cases, systems innovation models mature from needing philanthropic dollars to developing solid business models that would allow them to partner with large mainstream investors. However, as we know, market and social system inefficiencies continue to prevent taking innovative models to scale to fulfill their full potential. This is why the Foundation is shifting its focus to Solutions Finance, an integrated approach to deploying financial capital and adapting financial models to catalyze, sustain and scale systems transformation.Learn More